StanChart’s transactions with Iran are the subject of new whistleblower allegations

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Whistleblowers claim to have discovered billions of dollars in previously undetected transactions made by Standard Chartered with entities linked to Iran, including sanctioned companies and terrorist organizations, according to a court filing filed in New York on Friday.

The alleged transactions were discovered after the whistleblowers forensically re-examined spreadsheets and documents they had provided to US authorities in 2012 and 2013 and found hidden data embedded in them. The whistleblowers are seeking to revive a lawsuit they filed in Manhattan federal court in 2012 and reverse the dismissal of their claim.

The newly discovered data has led the two whistleblowers, one of them a former StanChart executive, to claim that the US government committed a “colossal fraud in court” when it claimed they failed to present substantial evidence to help the companies. authorities to take coercive measures against the bank. for violating US and international sanctions.

The new accusations are the latest in a series of claims spanning more than a decade made by the couple, which have sought to shed light on an era when StanChart facilitated access to the global financial system for rogue nations, including Iran.

StanChart called the filing “another attempt to use fabricated claims against the bank, following previous failed attempts” and said the allegations had been debunked by U.S. authorities. “We are confident that the courts will reject these claims, as they have done repeatedly,” he said.

With the help of a forensic investigator, the whistleblowers – Julian Knight, a former global head of foreign exchange trading banking who left StanChart in 2011, and Robert Marcellus, a foreign exchange trader – found hidden data covering more than half a million financial transactions. . They include transactions with sanctioned entities linked to Iran totaling $9.6 billion, and currency transactions linked to the Islamic Republic with a nominal value of $100 billion, according to the filings.

The transactions allegedly took place between 2008 and 2013, after the London-based bank announced it would cease all new business with Iranian clients in 2007.

One such example is data showing that StanChart conducted “direct and indirect transactions involving known front companies” for terrorist organizations, the documents state. These included transactions with a company owned by Mohammad Bazzi, who was subsequently sanctioned by the US Office of Foreign Assets Control in 2018 for his alleged role as a financier of the Lebanon-based militant group Hezbollah. The documents also highlight transactions with a Pakistani fertilizer conglomerate that allegedly sold the Taliban in Afghanistan explosive materials used to build improvised explosive devices.

Since 2012, StanChart has received sanctions related to sanctions violations and lack of due diligence totaling more than $2 billion. More than half of that amount was paid as part of a 2019 settlement that included a guilty plea by a former bank employee and a criminal indictment against a StanChart customer.

A U.S. federal statute allows whistleblowers to sue on behalf of the government in so-called “qui tam” actions and share in the proceeds if the claims are upheld. The whistleblowers argued that the material they had provided to US law enforcement agencies contained crucial information demonstrating non-compliance with sanctions.

However, government agencies argued that the case against the bank was reopened based on evidence unrelated to the material provided by the whistleblowers. The government further argued that after a thorough investigation it had concluded that the alleged violations highlighted by the whistleblowers were so-called “settlement transactions” or other transactions that “otherwise did not appear to violate any sanctions rules.”

In February, the U.S. Supreme Court declined to hear the whistleblowers’ civil lawsuit, which had been dismissed by a lower court.

The Federal Reserve Board declined to comment. The Department of Financial Services said it could not comment on ongoing litigation. OFAC referred questions to the Justice Department, which did not immediately respond to a request for comment.

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