Lawyers within the Treasury Department have recommended a preliminary settlement with Standard Chartered, clearing the path for the British bank to pay a penalty to state and federal prosecutors and to move beyond claims that it flouted laws governing international money transfers.
The lawyers approved a potential prepayment amount this week, a crucial step to a final agreement, though it will be much smaller than the $340 million the bank had to pay to New York State’s top banking regulator in a related case, according to three officials with direct knowledge of the settlement talks.
The differing penalties stem from determinations by federal authorities and Manhattan prosecutors that the bank’s suspected wrongdoing was much less extensive than the state banking regulator’s claims that Standard Chartered had
Prosecutors and Treasury officials will also assess a smaller penalty because the bank came forward voluntarily with information about its transactions and compliance with United States sanctions, according to the law enforcement officials.
Treasury officials plan to meet in the coming days with officials from the Justice Department and the Manhattan district attorney’s office, who also have been investigating the bank, before delivering the joint settlement to the bank, according to the federal officials.
Standard Chartered has maintained that “99.9 percent” of the transactions were
The law enforcement officials, who would not speak publicly because the settlement was not final, would not divulge the amount of the proposed penalty or the amount of transactions they believe violated the law.
A well-synchronized settlement is particularly important to the three agencies because they want to combat the perception that American authorities are riven by divisions as they investigate banks suspected of money transfer violations, according to law enforcement officials.
Their unified front in the effort to crack down on illegal flows of money around the globe was undercut, the prosecutors said, when the New York Department of Financial Services, led by a former prosecutor, Benjamin M. Lawsky, moved alone last month against Standard Chartered.
Part of the reason the bank settled so quickly was that Mr. Lawsky, in threatening to revoke Standard Chartered’s valuable state banking license, had taken aim at how the bank supposedly violated state law by masking the identities of its Iranian clients, lying to regulators and thwarting American efforts to detect money laundering.
Adding to the urge to settle quickly with Mr. Lawsky was the trove of inflammatory internal bank e-mails that Mr. Lawsky released as part of his order, according to people close to the bank.
Executives at the bank, which saw its stock battered after Mr. Lawsky’s action against it, had hoped that they could settle with all the federal and state agencies when they hashed out a settlement with Mr. Lawsky, according to people close to the bank.
At the time, though, federal officials, including the Justice Department were still deciding the extent of the wrongdoing at the bank, according to law enforcement officials briefed on the matter.
In a regulatory filing when Mr. Lawsky announced his settlement Aug. 14, the bank said that “a formal agreement containing the detailed terms of the settlement is expected to be concluded shortly.” But Standard Chartered is still working on the details with Mr. Lawsky’s office, according to a person with knowledge of the talks.
A global settlement against Standard Chartered, expected as early as the end of the month, will be the latest in a spate of sanctions violations cases.
Since January 2009, the Justice Department, Treasury and other government entities have
The latest case was against ING Bank, which reached a $619 million settlement in June over accusations that it had illegally moved billions of dollars into the United States for Cuba and Iran. In 2010, Barclays settled with federal and state authorities over similar violations for $298 million, the smallest amount so far.