What Benjamin Lawsky's tough stance on Standard Chartered over Iran means for other banks
New York watchdog Benjamin Lawsky bit hard on Standard Chartered over its dealings with Iran, and his success will have far-reaching implications
Benjamin Lawsky played hardball with Standard Chartered and a gantlet of federal and New York regulators and prosecutors right up until the last hours of a US$340 million settlement on Tuesday with the British bank over improper and concealed transactions tied to Iran.
Based on a dozen interviews, Reuters has learned that Lawsky, head of New York's recently created financial services regulator, which operates out of the state attorney general's office, ignored the entreaties of federal regulators on Monday to drop his own action in favour of a single, global settlement.
He also insisted that the bank agree that the settlement specify it had engaged in US$250 billion of transactions, a figure the bank had disputed vigorously.
Despite criticism of his aggressive approach, both from Standard Chartered and US government officials, Lawsky's tactics carried the day, and the repercussions for Standard Chartered and other banks he regulates are far-reaching.
Until now, banks accused of money laundering or other illegal activity have typically reached settlements with federal and local regulators and prosecutors that revealed few details of their alleged activities.
In contrast, Lawsky released embarrassing communications that exposed internal discussions, painted Standard Chartered as what he termed a "rogue institution" and threatened to pull its New York banking licence. He won a settlement far larger than many experts thought was possible.