During a call today with financial journalists, the Finance Director of Standard Chartered Bank stated that he expected the bank to settle for $330 million federal charges that it violated U.S. sanctions on Iran. Although this settlement has not been announced by the Office of Foreign Assets Control (“OFAC”), the statement by a senior official of the bank suggests that such a settlement must be close even if final documents have yet to be inked by all involved. This would be on top of the $340 million which Standard agreed to pay the New York Department of Financial Services in connection with the banks transactions with Iran.
I criticized the NYDFS action because it included transactions that were perfectly legal under OFAC’s “U-Turn” exception prior November 2008. However, it seemed clear that the bank continued to process U-Turn transactions with Iran even after OFAC eliminated that exception. The U-Turn transaction exception, until it was eliminated, permitted a U.S. bank to clear certain dollar transactions involving Iran by foreign non-Iranian banks. Thus, the federal charges against Standard, which did not attempt to penalize transactions permitted under federal law at the time, are on a completely different footing than the State charges which covered, at least in part, transactions that were permitted under the Iran regulations.