Standard Chartered fined $40 million over forex transaction rigging, poor compliance revealed
01 Feb 2019

Standard Chartered has landed in trouble with US authorities after it was found to have failed to effectively supervise its forex (fx) business and ensure compliance with laws.

On Tuesday, the New York Department of Financial Services (DFS) said it has fined the bank $40 million for attempting to rig foreign exchange transactions.

A DFS probe found that StanChart traders used a range of illegal tactics to maximize profits or minimize losses at the expense of the bank’s customers or customers at other banks. The traders used chatrooms, e-mails, phone calls and personal meetings to attempt to rig transactions.

The regulator also found compliance failings at the bank.

“The bank – which was attempting to grow its FX business – was slow to identify risks and develop policies and processes to govern the business and ensure compliance. The bank had few policies or training programs to guide staff about the line between proper and improper behaviour,” the DFS said.

It did, however, ‘cooperate’ with the DFS, by providing documents and trading records and it also took disciplinary action, including termination of employees identified by the DFS as engaging in misconduct.

“Under the consent order, Standard Chartered is obligated to submit enhanced written internal controls and compliance programs acceptable to the Department; improve its risk management program and establish an enhanced internal audit program,” a DFS statement explained.

Standard Chartered said: “The Consent Order with the DFS is part of an industry-wide investigation into the conduct of FX trading and sales practices that resulted in regulatory enforcement actions against a number of banks.

“Since the conduct at issue took place, Standard Chartered has remediated its systems and controls, and now has an appropriate control framework in place.”

PHOTO: Standard Chartered Bank

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