Yet another Shakespearean banking tragedy opened this week, with Standard Chartered starring this time as the villainous rogue. The day of reckoning will be Wednesday, when the New York Department of Financial Services will hear the bank’s defence against charges of hiding the involvement of Iranian government clients in 60,000 wire transactions, worth at least $250bn. Call it the Ides of August.
That hearing will focus on “wire stripping”. Standard Chartered employees allegedly hid the fact that wire transfers to New York were coming from Iranian government-owned institutions by stripping out references to Iran from wire instructions. Standard Chartered called this a “repair procedure,” and insists it was permitted.
Media commentators and bank analysts have suggested that the evil actors in this drama were the employees who did the “repairs” and the managers who supervised them. Others have absolved Standard Chartered, accepting the bank’s argument that the scope of wrongdoing was minimal and had nothing to do with terrorism. But the New York regulators’ order centres on the bank’s general counsel and compliance offices. This focus on lawyers is important.