In a constantly evolving world, there are some things that do not change. Standard chartered Bank who were fined $1.1 billion in 2019 for poor money-laundering controls and breaching sanctions were fined £20.47 million this month for violating sanctions imposed by the European Union on Russia.
The fines were a result of Standard Chartered Bank making a series of loans to Denizbank who at the time were wholly owned by Russia’s Sberbank and who were blacklisted by the EU in 2014.
In 2014 the European Union imposed restrictive measures on those responsible for actions which undermine or threaten the territorial integrity sovereignty and independence of Ukraine. The restrictive measures set out in the EU Regulation are intended to prevent certain Russian banks, companies, and their subsidiaries from accessing EU primary and secondary capital markets (including access to loans).
The bank was said to have made 102 loans between the years 2015 and 2018 to the Turkish bank and 70 of these loans which combined a transaction value of over £266 million breached the EU regulation in an assessment carried out by the UK Office of Financial Sanctions Implementation (OFSI); However Standard Chartered were only penalized for 21 of the 70 transactions dated after the 1st April 2017 which amounted to £97,484,807.71.
Standard Chartered themselves disclosed the suspected breaches of financial sanctions to the OFSI and carried out an internal investigation providing a detailed report to the OFSI.
As a result, of this Standard Chartered Bank were given a reduction of 30% in the overall penalty.
Standard Chartered requested the transactions to be reviewed by a minister who upheld the decision by the OFSI. However, Standard Chartered did not exercise their right of appeal to the upper tribunal.
By Abdullah Ashur, Junior Consultant at Lysis Group