British bank Standard chartered has been ordered to pay a total of $1.1 billion (£842 million) by US and UK authorities for money laundering activities and breaching economic sanctions.
The fines were made up of $947 million (£723 million) levied by the US Department of Justice and other agencies for sanctions violations in Iran, Burma, Zimbabwe, Cuba, Sudan, Syria, and Iran, and £102 million by the Financial Conduct Authority for anti-money-laundering breaches, including shortcomings in measures designed to tackle terrorist financing.
Heavy fines were expected by the bank, but the final amount was higher than the $900 million (£691 million) Standard Chartered set aside in February to cover them. As a result, the bank will have to take another hit in its next quarterly results.
Despite this, CEO Bill Winters said the bank was “pleased to have resolved these matters” and to have put what he called “these historical issues” behind it. “The circumstances that led to today’s resolutions are completely unacceptable and not representative of the Standard Chartered I am proud to lead today,” he added.
So how is the UK doing in AML generally? In January, the National Crime Agency published its annual findings on suspicious activity reports (SARS), revealing a year-on-year increase of nearly 10 percent, with money-laundering ‘red flags’ up 20 percent to 22,196.
However, those flags led to just 40 arrests in 28 cases, according to NCA statistics. Concerns were expressed that the City of London was acting as “a global laundromat, washing hundreds of billions of pounds in dirty money from around the world”, in the words of the FT.
The NHS has been one target for fraudsters, according to Operation Tarlac, led by the Lincolnshire Police Economic Crime Unit. Earlier this year, police found that a criminal gang with links to the oil industry, Dubai, Poland, and Turkey, had laundered money through the business accounts of seven NHS Trusts.
Several councils, housing associations, and other public bodies, were also hit by frauds that diverted a total of £12 million in payments to gang members. Last week, a Proceeds of Crime case awarded £1.7 million back to the affected Trusts, according to local news reports.
The property market has been another focus of investigation. In March, officers from HM Revenue and Customs (HMRC) raided 50 estate agents across England that were suspected of trading without being registered. The raids sent shockwaves through a property market that is already struggling with Brexit uncertainty.
Last year, Countrywide Estate Agents was fined £215,000 under AML rules for “failing to ensure policies, controls and procedures at group level” and for “failures in conducting due diligence, timing of verification, and proper record keeping”.
This was the highest single penalty last year. However, with the average UK property price hitting £243,639 in 2018, the figures are a drop in the ocean in financial terms.
Around the globe this month, a number of banks have been on the hunt for potential Russian money being laundered through their systems.
The heads of Bank of America, Morgan Stanley, and Citigroup appeared before Congress in the US this week, to tell investigators that they are trawling their businesses for evidence of laundered Russian cash, in the wake of allegations that Deutsche Bank helped criminals to move illicit funds out of Russia.
Meanwhile, Spain is probing allegations that tainted Russian cash was laundered through CaixaBank, in an investigation thought to be linked to the Danske Bank scandal, in which Denmark’s largest bank was accused of failing to stop money laundering at its Estonian branch.