Standard Chartered Sabotaged U.S. Sanctions Against Iran

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This is a case about Iran, money laundering, and national security.” – New York’s Department of Financial Services Superintendent Benjamin Lawsky

  • Standard Chartered admitted it conducted illegal money laundering for Iran.
  • Standard Chartered sabotaged the U.S. Cold War with Iran.
Shockwaves were felt on both sides of the Atlantic August 6 when Benjamin Lawsky, Superintendent of New York’s Department of Financial Services (DFS), unexpectedly filed a regulatory enforcement action against Standard Chartered Bank (SCB) for willfully violating U.S. sanctions by using the bank’s New York branch as a “front” for doing business with Iran.(1) In a decade long cover up that began in early 2001, the DFS asserts the bank hid “roughly 60,000 secret transactions involving at least $250 billion, reaping SCB hundreds of millions of dollars in fees.” While SCB disputed the amount of the transactions, it did admit that “under $14 million” in transactions violated U.S. sanctions.

The 27 page enforcement action against SCB was compiled from 30,000 pages of documents that included the bank’s internal emails, memos, and even formal operating manuals prepared by senior SCB management that provided mandatorystep-by-step wire stripping instructions for any payment messages containing information that would identify Iranian clients.” This “repair procedure” grew so large SCB had to automate the process and create “specific repair queues” for each Iranian client! From the very beginning, SCB’s in-house legal counsel helped senior management construct a framework to deceive U.S. regulators while touting the bank’s reputation for being “trusted worldwide for upholding high standards of corporate governance.”

It was SCB’s own independent auditors – Deloitte & Touche (D&T) – who enabled the bank to violate the terms of its 2004 settlement with the New York regulator and the Federal Reserve Bank of NY by telling SCB what the regulators were looking for based on D&T’s other foreign bank clients involvement in illegal U.S. dollar clearing activities! D&T’s “independent review” required under the settlement agreement intentionally deleted any references to certain types of payments that would have revealed SCB’s illegal practices. It was D&T’s review together with SCB’s senior management who intentionally provided four days instead of the twelve months of data requested that convinced the regulators to end the restrictions of the agreement that was crimping SCB’s business model.

New York State’s allegation marked the first time a regulator was demanding additional punishment beyond a multimillion fine and the usual slap on the wrist where the bank does not have to admit any wrongdoing. Superintendent Lawsky’s enforcement demanded SCB install a monitor of his choosing at the bank at SCB’s expense to ensure the bank’s full compliance with all regulations and procedures under U.S. law. Most shocking of all, Lawsky ordered the bank to appear at an August 15 hearing to demonstrate why the state regulator should not revoke its New York banking license and suspend its U.S. dollar clearing operations which according to the allegation, “clears approximately $190 billion per day for its international clients.”

After the enforcement was issued, SCB’s stock hit a three year low in London trading. Several British politicians along with Bank of England Gov. Mervyn King and Chancellor of the Exchequer George Osborne were exerting tremendous pressure on U.S. regulators and particularly Treasury Secretary Geithner to persuade Superintendent Lawsky to reach a settlement with SCB before August 15. The Treasury, Federal Reserve, the Justice Department and the Manhattan D.A. have been investigating SCB for over two years. Their reluctance to take action so far likely stems from fear of creating a backlash against U.S. financial institutions operating in Britain at a time when economic conditions remain fragile.(2)

On August 14 less than 24 hours before the 10:00 AM hearing, the DFS announced it had reached a settlement with SCB which canceled the hearing. Yesterday’s precedent setting settlement not only included a substantial $340 million civil penalty to the DFS, but in a huge victory for the DFS, SCB now acknowledged its involvement in at least $250 billion in unlawful transactions. Superintendent Lawsky will place DFS examiners at SCB’s New York branch and appoint a monitor for at least two years to evaluate SCB’s money laundering risk controls and implement corrective measures. Additionally, SCB will “permanently install personnel at the New York branch to oversee and audit any offshore money-laundering due diligence and monitoring undertaken by the Bank.”

Superintendent Lawsky’s enforcement marked the first time a regulator’s actions reflected that the U.S. is at war with Iran.

When politicians proclaim that economic sanctions and diplomacy never works, it is because there have always been loopholes ensuring its ineffectiveness. U.S. economic sanctions against Iran permitted “U-Turns” which allowed non-Iranian foreign banks such as Standard Chartered to initiate transactions offshore. These transactions were only allowed to pass through the U.S. enroute to other non-Iranian foreign banks. The Office of Foreign Assets Control (OFAC) within the U.S. Treasury Department revoked the U-Turn provision on November 10, 2008 over suspicions Iran was using its banks to finance nuclear weapons, missile programs and terrorist groups including Hezbollah, Hamas, and the Palestinian Islamic Jihad.

Unlike the outwardly aggressive energy of Mars which wages war through physical attack, as the planetary energy of money, banking, and diplomacy, Venus can strike a country where it really hurts by choking off its profits from trade. Waging war Venus-style to avoid the far greater casualties and costs of Mars-style conventional warfare means that economic sanctions cannot have any exceptions or loopholes. Nor can there be any “humanitarian” exceptions such as food and medical aid.(3)

The market speculates when there will be war with Iran, not realizing that the U.S. is already at war with Iran! Waging war Venus-style is not blatantly aggressive like Mars is. The President cannot go on national television and tell the nation he has declared war on Iran since the purpose of imposing strict sanctions is to coerce cooperation to give your opponent a chance to save face and reach agreement.

Strict sanctions take time to work even when there is full cooperation from nations, businesses and individuals. Meaningful punishment against those who violate the law by doing business with Iran sends a clear message to that nation and to Israel that this time the U.S. is serious about achieving its objectives by avoiding conventional warfare. If Israel starts a war with Iran, it could be difficult for the U.S. not to be drawn in.

As the planetary energy of communication, commerce, and movement, Mercury rules the processing of financial transactions and the movement and exchange of money between currencies. Earlier this year, Mars was retrograde in Virgo (January 23 – April 13) and Venus was retrograde in Gemini (May 15 – June 27) in the signs ruled by Mercury. In those posts, I described how the two planets retrograde stations impacted the USA’s frictional alignment between Mars in Gemini and Neptune in Virgo. This would affect the USA’s relations with its allies and open enemies in relationship to the USA’s penchant for waging wars connected to oil and drugs.(4) 

Retrograde periods bring a return of past issues, particularly situations that have not been fully resolved. It was a time to rethink war strategies as current and future conflicts do not require full scale armies, warships, and the other accruements of traditional warfare.(5) Both retrograde periods described reviewing past financial transactions. Venus and Mars engaged in a challenging alignment to one another indicated the conflict between not only the two different strategies of waging war, but how hard to aggressively pursue banks that had violated the sanctions.

The August 6 enforcement against Standard Chartered Bank occurred as Venus was completing its sojourn in Gemini. This represented the conclusion of the New York State regulator’s investigation into the bank’s unlawful practices and intent to deceive regulators. Mercury the trickster was retrograde in Leo August 6, reinforcing the energies of Venus in Gemini. For tricking regulators into thinking SCB was in compliance, the enforcement by the DFS threatened to revoke SCB’s New York banking license and suspend its U.S. dollar clearing business which is the heart of its U.S. operations.

The Moon in Aries August 6 reflected Superintendent Lawsky’s impatience to be the first regulator to initiate action that would have a deeper impact on the bank than a normal settlement. The Moon ignited the frictional alignment between Uranus and Pluto. The unexpected enforcement action said SCB “operated as a rogue institution” by engaging in Pluto-type secret activities such as money laundering.

The Aries Moon’s opposition to Mars and Saturn in Libra indicated that the DFS felt the other regulators had delayed taking action for far too long. The federal regulators took the opposite view, angry that Superintendent Lawsky decided to act alone rather than in a coordinated effort such as the Libor settlement with Barclays Bank on June 27, the day Venus stationed direct.

All of these planetary energies in initiating (cardinal) signs were an indication that events in this case would quickly move forward. Venus entering Cancer the sign of the Moon August 7 coincided with not only SCB lashing back to defend its turf, but with British politicians such as London Mayor Boris Johnson implying that the DFS’ move was “starting to shade into protectionism.” Mars/Saturn in Venus-ruled Libra describes the special relationship between the UK and the US, but also the competitive rivalry between London and New York as the world’s top banking center. No doubt US regulators and Wall Street feared that severe action against SCB could result in retaliation by UK authorities towards US financial institutions operating in the UK.

Mercury shifted from retrograde to direct motion August 8. Now the blame was reversed to the “rogue regulator" as the August 6 Moon to Uranus/Pluto reflects SCB has powerful friends in the upper echelons of government. The DFS was being pressured to reach a settlement with SCB before the August 15 hearing when the conjunction of Mars and Saturn in Libra became exact and Venus in Cancer would be impacting Uranus in Aries and Pluto in Capricorn.

On August 13 the Moon in Cancer squared the Aries Moon of August 6 as it impacted Uranus and Pluto. The Moon’s occultation to Venus in Cancer reflects that a settlement agreement between the DFS and SCB was about to be made public.

Venus helped SCB skirt the most punitive punishment, but its square to Uranus and opposition to Pluto together with the Mars/Saturn conjunction in Venus-ruled Libra indicated the $340 million penalty was the largest fine ever issued by an individual regulator for money laundering. The DFS has served as a trailblazer for regulators to issue even higher penalties to banks breaking the law.

With Mercury moving forward again, SCB’s leadership had to swallow its pride and reverse its original position to acknowledge the DFS’ assertion that the illegal transactions totaled over $250 billion.

A Mars cycle lasts two years which is the length of time that the DFS will have a monitor at SCB’s New York branch to ensure full compliance with U.S. regulations (Saturn). Mars conjoining Saturn in Libra the sign represented by the scales of justice also indicates that SCB is still under criminal investigation by the FBI and the Justice Department.

There are unconventional ways to wage war that if successfully employed can prevent the outbreak of a full blown traditional Mars-style war. Venus energy wants peace and harmony but is willing to take aggressive measures to achieve it. Waging war Venus style requires everyone’s full cooperation, including the banks. To quote from the DFS’ enforcement, engaging in prohibited dealings with Iran “indisputably helped sustain a global threat to peace and stability. By definition, any banking institution that engages in such conduct is unsafe and unsound.”

(1) New York’s Department of Financial Services (DFS) was established on October 3, 2011 to consolidate the state’s banking and insurance divisions into one department.

SCB was formed in 1969 upon the merger of the Chartered Bank of India, Asia, and China and the Standard Bank of South Africa. (I was unable to find the month and day of their 1969 merger.)

The DFS had uncovered evidence SCB did business with other U.S. sanctioned countries such as Burma, Libya, and Sudan.

(2)Other foreign banks have reached financial settlements with U.S. federal regulators for violating U.S. economic sanctions. 2010: Barclays $298 million, Credit Suisse $536 million, Lloyd’s $350 million. 2012: ING $619 million.

(3)While the Obama Administration’s sanctions are not 100% without exceptions, they are the most effective non-military action by any administration.

(4)Regulators have not yet reached agreement on the charges against HSBC following a July 16 Senate investigation into its role in money laundering for Iranian banks, Mexican drug cartels, and doing business with a Saudi Arabian bank whose founder backed al Qaeda.

(5)After waging war for years in Iraq and Afghanistan, it didn’t take conventional warfare to get the perpetrators of the September 11, 2001 terrorist attacks.

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