Scribd
Upload
69 views8 pages

Standard Chartered PLC Is A British Multinational Banking

Standard Chartered Bank was found guilty of deficiencies in its anti-money laundering (AML) controls. It failed to properly monitor high-risk transactions and conduct adequate customer due diligence, especially in its UAE branches. This allowed illicit funds to flow through the bank, including from Iranian individuals and entities evading sanctions. The bank has since increased AML compliance efforts, but faced large financial penalties and reputational damage as a result of its control failures.

Uploaded by

aditya sai
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as ODP, PDF, TXT or read online on Scribd
69 views8 pages

Standard Chartered PLC Is A British Multinational Banking

Standard Chartered Bank was found guilty of deficiencies in its anti-money laundering (AML) controls. It failed to properly monitor high-risk transactions and conduct adequate customer due diligence, especially in its UAE branches. This allowed illicit funds to flow through the bank, including from Iranian individuals and entities evading sanctions. The bank has since increased AML compliance efforts, but faced large financial penalties and reputational damage as a result of its control failures.

Uploaded by

aditya sai
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as ODP, PDF, TXT or read online on Scribd
You are on page 1/ 8

Introduction

• Standard Chartered plc is a British multinational banking[2] and financial services  company with


headquarters  in London, England. 
• It is an universal bank  which offers operations in credit cards, investment banking,consumer
banking,corporate banking,mortagage loans, private banking ,wealth management.
•  90% of its profits come from Asia, Africa and the Middle East.
• Key financial data
• Revenue- 14.74 billion$
• Operating income-1.613 billion$
• Net income- 0.741 billion $
• Total assests -789.050 billion$
• Total equity- 45.886 billion$
The case
• Standard chartered abnk(SCB) has been found  guilty
Key facts  

• SCB comprises a network of more than 1,700 branches and outlets in 68 markets.
• UK firms are required by the ML Regulations to establish and maintain appropriate and risk sensitive
policies and procedures in order to minimise the risk of their being used by those seeking to launder
the proceeds of crime, evade financial sanctions, or finance terrorism.
• These financial crime controls were particularly important for SCB as: 
• a. SCB operates extensively in major financial hubs which, from the scale, volume and values of the
business conducted, and/or the geographical location of those hubs, might present a higher risk of
financial crime;
•  b. SCB broad offering of products and services includes those which could present a higher risk of
financial crime, such as Correspondent Banking; 
•  c. it operates on a global basis.
•  a. SCB’s UK AML controls form the basis for the controls to be applied in its nonEEA branches
and subsidiaries; and also  responsible  for its  fairness 
AML  regulatory obligations
• Customer due diligence(CDD), enhanced due diligence(EDD) and ongoing monitoring
are measures designed to reduce the risk that a firm should be used by those seeking to launder
the proceeds of crime, finance terrorism or evade financial sanctions.
• If a firm has assessed that the business relationship with the customer presents, by its nature, a
higher risk of money laundering or terrorist financing, it must conduct EDD and increase its 
monitoring
• Firms also have an obligation to require their subsidiaries to apply CDD,EDD and ongoing
monitoring to follow ML regulations set out
•  Proper AML controls of the Respondent to prevent the underlying parties from gaining access to
the UK financial system for the purposes of money laundering or terrorist financing as there is a
high risk present due to correspondent banking
Deficiencies in SCB’s AML controls
• Deficiencies in ongoing monitoring
• Ongoing monitoring in UAE was complte faliure especially as the trigger mechanisms in palce was
repeatedly ignored , which can be particularly noted in the case of iran addendum
• Weaknesses in the escalation of AML risks in SCB’s UAE branches
• Faliure of various lines of defence
• the KCSA check i focused on administrative checks and was inadequate to test the quality of the
Due Diligence.
• Financial Crime Risk played a key role in SCB’s second line of defence. However, particularly in the
early part of the Relevant Period, the quality and quantity of resource in this area was inadequate.
• Inadequate response to warnings about small and medium enterprise CDD
• Inadequate response to Rejected Transactions
Deficiencies in SCB’s AML controls
• Defieciencies in  due dilligence
• SCB failed to ensure the AML controls which it required its UAE branches to apply were at least equivalent to
those required of a UK firm and also the quality and effectiveness of the due dilligence conducted was varied
•  Despite SCB’s internal compliance and monitoring functions warned about this lack of quality especilly in its
UAE branch where  they warned about inadequate anture of customer information
• Failure to establish and assess source of funds especially fund possesed huge risks  especially in case of a
politically exposed person, scb' own internal study  indicated that in over 33 % of cases  sources of funds could
not be traced  just due to bad quality due dilligience
• EDD implementation failures in relation to Iranian nationals SCB dealt with Iranian nationals, as long as those
customers were resident outside Iran and did not carry out business with/from Iran on their SCB account.
• To manage this, they developed the the Iran Addendum. This was a major faliure as bank was overwhelmed
and could not obtain proof of residency
• Improper implementation of Group Introduction Certificates(gic)
Strategies to avoid further faliures
• SCB is continously working with the Authority as well as other regulators in various jurisdictions in
which it operates to improve its AML controls. 
•  SCB is instituting a range of measures designed to improve its governance structure and oversight
of its non-EEA branches and subsidiaries.
• Constant updation of due dilligence and  investing heavily to improve the quality of due dilligence
• SCB has significantly increased the resource dedicated to managing financial crime risk and
emplyee numbers have quadrupled , along with major upper managemnet changes
• SCB has introduced new quality assurance checks to replace and/or supplement KCSAs; 
•  Scb has introduced new committees to improve oversight of SCB’s Correspondent Banking
business, including a Correspondent Banking Working Committee and Correspondent Banking
Oversight Committee;
 impacts 
• Financial impacts
• 947 million dollors in penalties to us authorities
• 102 million pounds in penalties to fca
• Reputational impacts
• Loss of customer trust
• PR damage
• Ethical impacts
• The money laundered through its system is suspected to  be use for terror financing
• money laundered is also suspected to be funnelled into  Irans nuclear program
• This has further disrupted the peace in the middle east

You might also like