Friday, October 23, 2020

Whistleblower: I Told Standard Chartered It Had Dirty Money Risk

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THE British whistleblower behind a legal action that could leave Standard Chartered facing a £1.5billion fine claims that he was ousted from the bank after he warned senior staff of a major loophole in its money laundering checks.

The former Standard Chartered executive filed a report in 2011, seen by The Mail on Sunday, which alleges that the way foreign exchange transactions were processed meant the bank could not tell who its clients were.

In the document, he alleges that the way the bank’s systems operated meant that ‘there is no line of sight on the client’.

The whistleblower, who wishes to remain anonymous, claims he warned two managing directors in the Singapore arm of Standard Chartered, where he was working at the time, that it was possible to ‘mis-spell the name’ of a client and still process a transaction.

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He alleges that this meant ‘there was no way of carrying out money laundering checks’ or working out whether a client was on an official blacklist of people or countries with whom the bank was forbidden from doing business.

Banking regulations typically state that firms must carry out strict identity checks to ensure that they are not offering services to criminals or fraudsters who wish to launder money.

In 2012, Standard Chartered was hit with a £415million fine for breaking US sanctions by working with clients linked to Iran. Then in April this year, the bank received a $1.1billion (£835million) fine for continuing to conduct business with people linked to Iran and other nations, including Sudan and Cuba.

When the April fine was announced, chief executive Bill Winters said it marked the end of the saga and pointed blame at ‘two junior employees’ for breaking the sanctions. But The Mail on Sunday revealed last weekend that Standard Chartered could face a new £1.5billion fine after whistleblowers — including the Briton who raised the alarm in 2011 — filed a civil case in America.

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The British whistleblower alleges that after he alerted senior management, he was summoned to a meeting with an executive at Standard Chartered, where it became clear that he had to leave the bank.

‘[The executive] said, “I heard you wanted to leave the bank”. I said that was news to me and he said, “I think it’s in the best interests of all that we part company”,’ the whistleblower said.

He subsequently left the firm and alerted the US authorities. Under the US False Claims Act, which is designed to encourage people to expose corporate wrongdoing, whistleblowers in the US can receive up to 25 per cent of any penalties awarded against a company.

The Standard Chartered whistleblowers have not received any money from the previous fines but would benefit if they are successful with the civil lawsuit.

The Mail on Sunday understands that documents outlining the new case — which is being revived after the whistleblowers withdrew it in 2017 — will be publicly available within days.

A spokesman for Standard Chartered said: ‘We still have not been served with the lawsuit described, therefore we cannot comment on the specifics provided but they sound similar to claims made in a case that was filed against us by a private company and then dismissed in 2017.

‘If this case is the same or similar to the one previously dismissed, we believe it lacks merit.

‘The US authorities have been aware of the claims for several years and did not see fit to join the previous suit or include the claims as part of our resolution of historical sanctions compliance issues on April 9, 2019. Should we be served with the lawsuit described we will defend ourselves vigorously.’

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