Standard Chartered Accused of Financing Terrorist Groups Through Billions in Transactions

Standard Chartered, one of the UK's largest banks, has come under fire for allegedly facilitating transactions worth billions of dollars that funded some of the world's most notorious terrorist organizations. According to a court filing in New York, from 2008 to 2013, the bank carried out thousands of transactions in violation of sanctions against Iran.

An independent expert identified $9.6 billion in foreign exchange transactions linked to groups designated as terrorist organizations, including Hezbollah, Hamas, al-Qaeda, and the Taliban. These transactions came to light after whistleblowers re-examined material previously sent to US authorities in 2012.

In 2012 and 2019, Standard Chartered admitted to breaching sanctions against Iran and other countries, resulting in fines totaling more than $1.7 billion. However, the bank has not admitted to conducting transactions for organizations defined as terrorist groups.

The original accusations were made by Julian Knight, a former head of Standard Chartered’s transaction services unit from 2009 to 2011, and Robert Marcellus, a currency trader. The new allegations involve companies that supported recognized terrorist groups either intentionally or unintentionally.

In court papers filed on May 31 in New York, Knight claimed that the transactions discovered in the re-examined material were previously missed by investigators. Daniel Alter, former general counsel at the New York Department of Financial Services, told the BBC that these new accusations would be “exponentially worse” than what Standard Chartered admitted in 2012. He emphasized that, if proven true, these allegations would show a “frightening connection to not just commercial entities, but terrorist organizations [and] terrorist front companies” for groups such as Hamas, Hezbollah, al-Qaeda, and the Taliban.

In response, Standard Chartered issued a statement calling the filing "another attempt to use fabricated claims against the bank, following previous unsuccessful attempts. The false allegations underpinning it have been thoroughly discredited by the US authorities who undertook a comprehensive investigation into the claims and said they were ‘meritless’ and did not show any violations of US sanctions. We are confident the courts will reject these claims, as they have already done repeatedly.”

New documents filed in New York claim that more than $100 billion worth of transactions were conducted by the bank from 2008 to 2013 in breach of sanctions against Iran. An independent expert has identified $9.6 billion in transactions with individuals and companies designated by the US government as funding “terror groups,” including Hezbollah, Hamas, al-Qaeda, and the Taliban.

Standard Chartered was previously accused of falsifying transaction data on Swift, an international payment system, to move billions of dollars through its New York branch on behalf of sanctioned entities such as the Central Bank of Iran. However, in September 2012, then-Chancellor George Osborne intervened on the bank’s behalf, and three months later, the US Department of Justice decided not to prosecute the bank.

The foreign exchange transactions identified in the court filings had not come to light earlier, and there is no suggestion that Osborne or then-Prime Minister David Cameron had any knowledge of these transactions at the time. The transactions were hidden in confidential bank spreadsheets first handed to US authorities in 2012 by whistleblowers, including Julian Knight.

The whistleblowers allege that US government agencies made false statements to a court to have their claim for a whistleblower’s reward dismissed. In 2019, US authorities successfully applied to have their case dismissed, with an FBI agent claiming that the evidence showed nothing indicating the bank engaged in improper transactions after 2007. The US authorities argued that the allegations “did not lead to the discovery of any new violations” and the court dismissed the case as “meritless.”

However, independent analysis by David Scantling, an expert in counter-terrorist financing, contradicts this. In a court filing, he stated that the spreadsheets contain records of more than half a million transactions between 2008 and 2013 that were “cloaked” but could be extracted through a simple technique known to analysts in his field. His declaration says that among the records are numerous transactions by Standard Chartered with or on behalf of Iranian banks, companies, and Middle Eastern money exchanges that finance designated terrorist organizations.

Scantling’s declaration also highlights transactions with a Pakistani fertilizer company, Fatima Fertilizer, known for selling explosive materials used by the Taliban in roadside bombs that killed or maimed thousands of UK and US military personnel in Afghanistan.

Daniel Alter described the new disclosures as “shocking” and “exponentially worse” than what the bank admitted in 2012. He said, “This shows a frightening connection to not just commercial entities, but terrorist organizations, terrorist front companies for organizations such as Hamas, Hezbollah, al-Qaeda, the Taliban – things that make up a regulator’s nightmare – and we didn’t know that: it was never disclosed to us. And it wasn’t apparent in the data that we had. It’s a whole different story.”

Standard Chartered, headquartered in London, primarily serves customers in Africa, the Middle East, and Asia. When Osborne intervened on the bank’s behalf, it was at risk of criminal prosecution for money laundering by the US Department of Justice. In September 2012, Osborne wrote to Ben Bernanke, then-chair of the US Federal Reserve, and US Treasury Secretary Tim Geithner, meeting them the following month. Two months later, the bank was fined $300 million but avoided prosecution with a deferred prosecution agreement (DPA). No individual bank executive was prosecuted.

In 2019, Standard Chartered agreed to another DPA for transactions between 2007 and 2011 and was fined an additional $1.1 billion. The FBI and US Department of Justice declined to comment, and neither Cameron nor Osborne commented on the record. Standard Chartered reiterated its confidence that the courts would reject the claims, as they have done previously, asserting that US authorities had found the whistleblowers’ claims to be “meritless” and not indicative of sanctions violations. However, the whistleblowers claim that the US authorities have perpetrated “a colossal fraud on this court by falsely denying” the evidence they provided.

By fLEXI tEAM