Standard Chartered accused of over $250bn of illegal transactions to Iran

"You fucking Americans. Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians?"

Standard Chartered, the British bank, stands accused of having run a major operation to facilitate money transfers in and out of Iran, in violation of American sanctions against the company. The amount of money it is thought moved totals $250bn, and would have earned Standard Chartered millions in fees.

The New York department of financial services said in a statement that:

Motivated by greed, [Standard Chartered] acted for at least ten years without any regard for the legal, reputational, and national security consequences of its flagrantly deceptive actions.

The full complaint claims jaw-dropping levels of arrogance on the part of the bank. When London was informed of concerns by the head of American operations that US law was being systematically broken, the group director replied:

You f---ing Americans. Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians?

In order to facilitate the trades without being found out, the banks employees had to strip the information that the trades were coming from Iran out of the wire transfer. And when volume grew too high to manage, they automated the systems:

When SCB anticipated that its business with Iranian Clients would grow too large for SCB employees to “repair” manually the instructions for New York bound wire transfers, SCB automated the process by building an electronic repair system with “specific repair queues,” for each Iranian Client.

Once the bank realised that the heat was on, it started getting even more tricksy. It asked its auditor, Deloitte, to delete any mention of the activities from its report:

Having improperly gleaned insights into the regulators’ concerns and strategies for investigating U-Turn-related misconduct, SCB asked D&T to delete from its draft “independent” report any reference to certain types of payments that could ultimately reveal SCB’s Iranian U-Turn practices. In an email discussing D&T’s draft, a D&T partner admitted that “we agreed” to SCB’s request because “this is too much and too politically sensitive for both SCB and Deloitte. That is why I drafted the watered-down version.”

And eventually even moved their compliance department to India to forestall the regulators:

Outsourcing of the entire OFAC compliance process for the New York branch to Chennai, India, with no evidence of any oversight or communication between the Chennai and the New York offices.

What's really scary is that even the "good guys" - the people at Standard Chartered who were raising questions - reveal breathtaking attitudes towards breach of law. The head of American operations, who first told London of his concerns, is quoted as writing:

Firstly, we believe [the Iranian business] needs urgent reviewing at the Group level to evaluate if its returns and strategic benefits are . . . still commensurate with the potential to cause very serious or even catastrophic reputational damage to the Group. Secondly, there is equally importantly potential of risk of subjecting management in US and London (e.g. you and I) and elsewhere to personal reputational damages and/or serious criminal liability.

Reread that first point. He is not saying "we have broken the law, and need to stop", but instead "we have broken the law, and need to review its returns and strategic benefits to make sure it's worth doing". That is evidence of internalised corruption to a worrying degree.

The bank itself rejects "the position and portrayal of facts made by the New York State Department of Financial Services", according to its statement. Its major position is that the vast majority of its transactions to Iran were legal, and the the DFS has misinterpreted a point of law. It claims just $14m worth of transactions broke the regulations, and that it brought those to the regulator's attention as soon as it knew.

Standard Chartered had been one of the banks which made it through the crisis relatively unchanged. That looks set to change now.

Standard Chartered faces severe allegations. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
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As crime moves online, the police need the investment in technology to follow

Technology offers solutions, not just threats.

It’s perhaps inevitable that as the world becomes more digital, so does crime. This week Alison Saunders, director of public prosecutions, recognised that online crime is as serious as face-to-face crime. “Hate is hate,” Saunders wrote referring to internet abuse, and the police should protect people from it wherever they are. This will add demand to under-pressure police forces. And it is only the tip of the iceberg. 

Forty-seven per cent of crime involves an online element. Police recorded 30,000 instances of online stalking and harassment last year. People are 20 times more likely to be a victim of fraud than robbery, costing businesses an estimated £144bn a year. On a conservative estimate, 2,500 UK citizens use the anonymous dark web browser, Tor, for illegal purposes such as drug dealing, revenge porn and child sexual exploitation.

The police need new technology to meet demand, a Reform report published today finds. Some progress has been made in recent years. West Midlands Police uses an online portal for people to report incidents. Durham uses evidence-gathering software to collect social media information on suspects, and then instantly compile a report that can be shared with courts. Police have benefited from smartphones to share information, and body-worn cameras, which have reduced complaints against police by 93 per cent.

Yet, Theresa May’s 2016 remarks that police use “technology that lags woefully behind what they use as consumers” still stand. Officers interviewed for Reform’s research implored: “Give us the tools to do our job”.

Online evidence portals should be upgraded to accept CCTV footage. Apps should be developed to allow officers to learn about new digital threats, following the US army’s library of knowledge-sharing apps. Augmented-reality glasses are being used in the Netherlands to help officers identify evidence at digital crime scenes. Officers would save a trip back to the station if they could collect fingerprints on smartphones and statements on body-worn cameras.

New technology requires investment, but forces are reducing the resources put into IT as reserves have dried up. Durham plans to cut spend by 60 per cent between 2015-16 and 2019-20. The government should help fund equipment which can meet demand and return future productivity savings. If the Home Office invested the same as the Department of Health, another department pushing “transformative” technology, it would invest an extra £450m a year. This funding should come from administrative savings delivered through accelerating the Government’s automation agenda, which the think tank Reform has previously calculated would save Whitehall £2.6bn a year.

As crime moves online, police must follow. Saunders is right to point to the importance of meeting it. But technology offers solutions, not just threats. Installing the next generation of equipment will give police the tools to do their jobs, addressing online hate and more. 

Alexander Hitchcock is a senior researcher at reform