Slaughter and May corporate partner Nigel Boardman and dispute resolution partner Richard Swallow helped Standard Chartered yesterday (14 August) reach a $340m (£217m) settlement with the New York State Department of Financial Services (DFS) over allegations that it breached US sanctions and hid transactions with Iran.

The magic circle firm provided UK advice to the bank, alongside Wall Street leader Sullivan & Cromwell, where corporate and financing partner Rodgin Cohen and dispute resolution partner Samuel Seymour provided US advice. Both firms were instructed after the alleged illegal activity took place.

Confirmation of the settlement means Standard Chartered will avoid having its New York banking licence revoked and comes just over a week after the bank was accused by the DFS of hiding transactions worth around $250bn (£160bn) which breached sanctions.

A filing submitted by the DFS stated that Standard Chartered actions "left the US financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes".

The resolution will be seen as controversial by some who argued that the New York regulator has upstaged other US authorities, however it will also be seen as a victory for New York superintendent of financial services , Benjamin Lawsky, who brought the claim.

Last week's DFS filing, which was strongly refuted by the UK-bank, suggested Standard Chartered London-based group legal counsel repeatedly ignored external legal advice about the transactions.
The document refers to in-house counsel's involvement in the alleged money laundering as early as 1995, stating the "general counsel embraced a framework for regulatory evasion".

According to the document, in 2001 the bank sought advice from outside counsel, (reportedly Morrison & Foerster) who informed the legal and compliance departments that in order to comply with US law, Standard's New York branch would have to ascertain that the US dollar clearing transactions were permissible.

It states the external advice was ignored, with senior legal figures within the bank conspiring "with Iranian clients to transmit misinformation to the New York branch by removing and otherwise misrepresenting wire transfer data that could identify Iranian parties."

Further external advice in 2003 warned the bank about its strategy with Iranian financial institutions, but it was not until 2005 that a senior member of the legal department said in an email that failing to take the sanctions seriously meant risking "penalties ranging from civil enforcement actions to criminal prosecutions."

Standard Chartered previously defended its position in a statement, pointing out that it voluntarily approached all relevant US agencies in January 2010 to inform them about a review of transactions relating to Iran between 2001-2007 and their compliance with US laws.

It said the DFS had not provided "a full and accurate picture of the facts" and said "well over 99.9% of the transactions relating to Iran complied with the U-turn regulations. The total value of transactions which did not follow the U-turn was under $14m (£8.9m)."
Yesterday's settlement with New York does not rule out further penalties from other US regulators.