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Standard Charteredâ€™s compliance department is apparently pretty bad at complying. In 2012, the bank was finedÂ $340 millionÂ for hiding transactions with sanctioned Iran. As part of the settlement, Standard Chartered bank (SCB) was required to â€śremediate anti-money-laundering compliance problems,â€ť Dealbookâ€™sÂ Ben Protess and Chad BrayÂ report,Â and hire an outside monitor to judge whether the problems were in fact remediated.
They werenâ€™t, and the bank will payÂ $300 millionÂ for â€śanti-money laundering failings in its United Arabs Emirates and Hong Kong businesses,â€ť ReutersÂ Michelle Price reports. The failures, laid out in aÂ settlementÂ with the New York Department of Financial Services, display an almost comical or willful ineptitude, depending on your perspective. SCB, the settlement says, â€ścreated a rulebook with procedures to aid it in detecting high-risk transactions.â€ť But the rulebook was filled with errors that SCB didnâ€™t know about, because it didnâ€™t try to find out if the rulebook was adequate before or after it wrote it. This allowed transactions that should have been closely scrutinized to sail through unimpeded. To top it all off, SCB didnâ€™t properly monitor its own transaction monitoring system. You can see why an independent monitor would be necessary.
As part of itsÂ settlement, the bank will also suspend clearing payments in dollars for certain clients, and take even more remedial measures. One of those is extending for two more years the term of Navigant, the independent monitor that caught the latest slip up.
Matt LevineÂ wonders why, given how bad SCB seems to be at understanding and preventing money-laundering, the monitor should content itself with just reporting SCBâ€™s problems: â€śIf the monitor knows so much about anti-money-laundering procedures, shouldn’t it have just designed the procedures? Isn’t the goal to have less money laundering?â€ť
The bankâ€™s management isnâ€™t taking the fall. CEO Peter Sands,Â Protess andÂ Brayreport, says he has â€śno other plansâ€ť than to remain in his position. Earnings per shareare down, though, and the board isÂ under pressureÂ to make a change. If Sands is ousted, it wouldnâ€™t be the first time a board used scandal as a pretext for aÂ financially-motivatedÂ decision. Â â€”Â Ben Walsh
On to todayâ€™s links:
Correlation of the Day
The richer you are, the more likely you are to think trophies are only for winners -Â Alex Tabarrok
And another: Colorado has drastically reduced its teen pregnancy rate by giving teens access to long-term contraceptives -Â WaPo
For the Wages
“The fantasy of finding someone who is punctual, productive and willing to be paid a pittance is hard to let go” -Â WSJ
“If we were brave enough, we’d say our survey data indicate [a] quick wage uptick is ‘unlikely’”Â -Â Atlanta Fed