|Dubai Clients May Sue Standard Charter over Account Closures|
Standard Chartered Bank may be forced to close thousands of accounts held by clients in the United Arab Emirates, as a result of money laundering enforcement action by the New York State regulatory authorities.
The UK-based bank has accepted that the anti-money laundering transaction surveillance system at its New York branch was deficient in some respects. It has agreed a settlement with the NY State Department of Financial Services that also includes a USD300 million fine and an undertaking to stop making dollar transfers for some of its Hong Kong clients.
However, the deal also requires SCB to close the accounts of higher-risk small and medium sized enterprise clients in the UAE –although, according to Dubai's central bank, SCB's UAE branches have not committed any significant violations of international money laundering rules.As a result of this, the bank has announced it will exit that sector of its UAE business (though not the UAE as a whole) within the month. It is the largest international bank in the UAE, with over 340,000 customers. The country is the bank's second-most profitable source of commercial business, next to Hong Kong.
UAE's central bank estimates that between 1,400 and 8,000 UAE accounts will be affected. Some of the clients are reported to be preparing to sue the bank for the 'material and moral' damage caused them by the closures.
The opinions expressed do not constitute investment advice and specialist advice should be sought about your specific circumstances.
Published on our website on Aug.28, 2014