Standard Chartered: UK bank accused of helping finance terrorists

Image caption, Standard Chartered Bank is headquartered in the City of LondonArticle information

• Author, Andy Verity
• Paper, BBC News

• June 4, 2024, 01:33 BST

A British bank that escaped prosecution for money laundering carried out billions of dollars in transactions for financiers of terrorist groups, US court documents allege.

Standard Chartered, one of the UK’s biggest banks, avoided prosecution by the US Department of Justice after Lord Cameron’s government intervened on its behalf in 2012.

New documents presented to a New York court claim that thousands of transactions worth more than $100 billion were carried out by the bank between 2008 and 2013, in violation of sanctions against Iran.

An independent expert identified $9.6 billion in foreign exchange transactions with individuals and companies designated by the US government as financiers of “terrorist groups,” including Hezbollah, Hamas, Al-Qaeda and the Taliban.

In a statement, the bank said it disputes the whistleblowers’ claims, saying their previous claims have been “completely discredited” by US authorities.

Sanctions violated

Standard Chartered was publicly accused of falsifying transaction data on Swift – an international payments system used by thousands of financial institutions – to move billions of dollars through its New York branch on behalf of sanctioned entities such as the Central Bank of Iran.

But in September 2012, George Osborne, then chancellor in Lord Cameron’s government, secretly intervened on the bank’s behalf.

Three months later, the US Department of Justice decided not to prosecute the bank.

The foreign exchange transactions identified in the court records have not yet been revealed and it is not suggested that Mr Osborne or Lord Cameron had any knowledge of these transactions at the time.

The bank twice admitted to violating sanctions against Iran and other countries – first in 2012 It is then in 2019 – pay fines totaling more than $1.7 billion. But he did not admit to carrying out transactions for “terrorist” organizations.

The transactions were hidden in confidential banking spreadsheets first handed over to US authorities in 2012 by two whistleblowers, including a former Standard Chartered executive, Julian Knight.

They allege that US government agencies made false statements in court so that their whistleblower reward request was rejected.

US authorities involved in the bank’s investigation successfully requested the dismissal of its case in 2019. An FBI agent argued in court that he showed nothing that “indicated or suggested that the bank had engaged in improper transactions in US dollars” after 2007.

US authorities argued that the whistleblower’s allegations “did not lead to the discovery of any new… violations” and the court found the case “without merit.”

However, an independent analysis by an expert with decades of experience in counter-terrorism financing, including in the US Department of Defense (DoD) and the private sector, David Scantling, contradicts this.

In a court filing last Friday, he claims the spreadsheets contain records of more than half a million separate transactions between 2008 and 2013 that were “disguised,” meaning they were not immediately visible in the spreadsheets but could be extracted. through a simple technique and well-known by analysts in your field.

Its statement says that among the records are numerous Standard Chartered Bank (SCB) transactions, “with or on behalf of Iranian banks, Iranian companies and Middle Eastern exchange houses which, according to [the US government]finance designated foreign terrorist organizations.”

Image caption David Scantling has experience examining illicit banking transactions

He says the SCB processed transactions for a bank representing the Central Bank of Iran after it claimed to have halted its Iranian operations in 2007.

This happened at the same time the country was borrowing an average of $2 billion a day from the Term Auction Facility, an emergency program created by the US government to support banks during the 2007-2009 global financial crisis.

“The newly extracted data simply cannot be reconciled with the government’s representations to the court in this matter that the [whistleblowers’ evidence] contains no evidence of undisclosed sanctions violations,” Scantling’s statement reads.

The transactions include those of a Pakistani fertilizer company, Fatima Fertiliser, known for selling explosive materials that were used by the Taliban in roadside bombs that killed or maimed thousands of UK and US troops in Afghanistan.

Liverpool FC’s shirt sponsor SCB also facilitated 73 transactions for a Gambian shell company owned by a major Hezbollah financier, Mohammad Ibrahim Bazzi, the documents allege.

Image source, Getty Images

Image caption, Standard Chartered is the main shirt sponsor of Liverpool FC

Daniel Alter, former general counsel for the New York Department of Financial Services who first sued SCB for sanctions violations, called the new disclosures “shocking” and “exponentially worse” than the bank admitted in 2012.

“This shows a frightening link not only to commercial entities, but also to terrorist organizations, terrorist front companies for organizations like Hamas, Hezbollah, Al-Qaeda, the Taliban – things that are a regulator’s nightmare – and not we knew this: it was never disclosed to us. And that wasn’t apparent in the data we had,” Alter told the BBC. “It’s a totally different story.”

SCB, headquartered in London, primarily serves clients in Africa, the Middle East and Asia.

When Osborne secretly intervened on the bank’s behalf, it risked criminal prosecution for money laundering by the US Department of Justice.

On September 10, 2012, Osborne wrote to Ben Bernanke, then chairman of the US central bank, the Federal Reserve, and then US President Barack Obama’s Treasury Secretary Tim Geithner. He met them the following month.

Two months later, the bank was fined $300 million but escaped prosecution with a deferred prosecution agreement (DPA), a form of probation for companies. No individual bank executives were prosecuted.

The same month, Knight approached US authorities with evidence that the bank’s misconduct was far worse than it had admitted and continued after 2007.

In 2019, the SCB agreed a new DPA in relation to transactions between 2007 and 2011 and was fined a further $1.1 billion.

‘Without merit’

Both the FBI and the US Department of Justice declined to comment. Neither Lord Cameron nor Mr Osborne have commented officially.

The SCB said it is “confident that the courts will reject these claims.” It stated that US authorities had previously concluded that the whistleblowers’ allegations were “without merit” and “did not show any violations of US sanctions”.

But the whistleblowers claim that U.S. authorities committed “a colossal fraud on this court by falsely denying” that the whistleblowers provided “previously unknown and damning evidence.”

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