Standard Chartered Is Fined $13.6 Million in India for 2007 Deal
08 Sep 2020

India’s anti-money laundering agency fined Standard Chartered Plc 1 billion rupees ($13.6 million) for breaking foreign exchange rules when it worked on the takeover of a local bank, marking one of the country’s biggest penalties imposed on an overseas lender.

An eight-year probe found that Standard Chartered violated the so-called foreign exchange management act — which monitors offshore financial transactions — when it worked with a group of investors to buy a stake in Tamilnad Mercantile Bank Ltd. in 2007, according to an August order from India’s enforcement agency that was seen by Bloomberg.

“Senior officials at Standard Chartered saw an investment in TMB shares as an opportunity that might ripen into an eventually larger ownership for the bank,” Sushil Kumar, the enforcement agency’s special director, said in the order.

A representative for the British lender confirmed receipt of the order, adding that the bank was evaluating it and so unable to comment further.

Escrow Accounts

Standard Chartered — India’s largest foreign bank by branches — also acted as a custodian for shares on the deal, according to the order. Tamilnad Mercantile was fined almost 170 million rupees for similar charges, the order said.

A spokesman at Tamilnad Mercantile declined to comment, while the Enforcement Directorate didn’t immediately respond to an email seeking comment.

By Suvashree Ghosh and Anto Antony, Bloomberg, 7 September 2020

Read more at Bloomberg

RiskScreen: Eliminating Financial Crime with Smart Technology

Advance your CPD minutes for this content, by signing up and using the CPD Wallet

FREE CPD Wallet