Few will come to the defense of banks being attacked by anti-money laundering fines but this most current one most likely to be enforced upon Standard Chartered Standard Chartered is really definitely to the more unreasonable end of the range of such fines. For exactly what the great seems being enforced for is having actually set up software that does not work quite appropriately. Not entirely and entirely according to the minutiae of the administrative policies. Picture how much Healthcare. gov would be paying if we held government itself to those same standards?
There are some anti-money laundering fines that appear simply and exemplary but not all them and the Standard Chartered executives do appear to have a point when they whine about this latest one:
Banks are being punished too harshly for lapses in anti-money laundering efforts, Standard Chartered Plc’s head of Asia operations said – the second senior bank executive today to voice disappointment over exactly what lots of in the industry see as overzealous regulation.
StanChart stated on Wednesday that a computer error in a security system which types part of its anti-money laundering controls, would likely to result in a fine and remedial action. It is also readied to result in an extension of a two-year monitoring period imposedtroubled the bank in 2012 for breaking United States sanctions by hiding transactions connected to Iran.
“Banks have been asked to play the function of policing anti-money laundering …(but when) we have a lapse we do not get treated like a policeman, we are dealt with like a criminal,” Requirement Chartered Asia CEO Jaspal Bindra stated in an interview with Reuters on Thursday.
The mistakes were discovered by the display that was imposed upon the bank as a result of that earlier case:
The alleged lapse in anti-money laundering controls, caused by a trouble with a software program, was identified by Ellen Zimiles, the independent monitor installed at the bank as part of a 2012 settlement for breaching United States sanctions versus Iran, said the person. The monitor’s term could be extended beyond its initial 2 years, Standard Chartered stated.
So let’s walk with the general public policy of this. We’ve jointly chosen (or the government has chosen for us, your choice there) that we don’t desire the banks doing certain things. Handling money for routines and countries we don’t such as, managing cash for medicine dealerships which sort of thing. We for that reason impose guidelines on exactly what the banks may or could refrain in their handling of cash. And one part of those rules is that they should carry out specific look at whose cash it is that they are managing. And they need to have the ability to prove that they are following those policies too.
This provides us a spectrum of behavior that we can get outraged about. Requirement Chartered, a few years back, was discovered intentionally and purposefully lying about handling money for Iran, then as now under specific sanctions. OK, that’s clear cut, they’re intentionally breaching the guidelines, cough up a great please. Likewise, BNP Paribas BNP Paribas was discovered doing much the very same thing in managing US dollar transactions for Sudan and Cuba, once again in breach of sanctions. Great, thanks, we’ll take a huge check from you, $9 billion during that circumstances.
However there are other cases that are less clear cut. The HSBC fine for instance, was not in fact because anybody proved that they were managing cash money deals for Mexican drug dealerships. Rather, it was due to the fact that there was a suspicion that they may have been but HSBC had not performed the necessary steps nor did it have the documentation to prove that it had carried out those needed steps. That cost them $1.9 billion. There was no clear breach of sanctions, nor no clear evidence of cash laundering occurring. There was evidence that they had not followed the documents policies to reveal that there wasn’t any cash laundering.
Then we get to this, second, Standard Chartered prospective fine. The display put into the bank discovers that the software system consists of errors. OK, well, a mistake free software system is an unusual beast indeed. So, exactly what happens next? Is the bank recommended of this mistake and aided in correcting it? No, another big fine is recommended. Once more note that no cash laundering has been shown to have actually taken locationhappened. This is simply about whether the ideal ticks have actually been put in the right boxes to show that the guidelines have been followed.
It can be said, I am arguing, that this is becoming unreasonable. As above, simply think how much money the Feds would need to be paying out if we attempted to hold Health care. gov to this standard of liability? A software system that must work perfectly and if it does not we’ll fine you?
There’s an old English phrase that what is sauce for the goose is likewise sauce for the look. Suggesting that there have to be equity in the means that different actors in the economy are treated. It would be unfair of government to require that personal business measure up to standards that government itself does not manage. And there’s a certain whiff of that occurring here.