US probes possible RBS breach of Iran sanctions

Authorities are investigating the Royal Bank of Scotland and Commerzbank as part of a crackdown on Iran transactions.

August 22, 2012 14:58
2 minute read.
People walk past a Royal Bank of Scotland (RBS)

RBS. (photo credit: REUTERS)

US authorities are investigating Royal Bank of Scotland over possible breaches of sanctions on Iran, as part of a crackdown in which Standard Chartered has already agreed to pay a

In the disclosures accompanying the RBS half year results on Aug. 3, the British bank said it had "initiated discussions with UK and US authorities to discuss its historical compliance with applicable laws and regulations, including US economic sanctions regulations".

These followed an internal review begun by Hester shortly after his arrival at the bank in 2008.

"The investigation costs, remediation required or liability incurred could have a material adverse effect on the group's net assets, operating results or cash flows in a particular period," the bank said. RBS had been making similar disclosures for the past 18 months, the spokeswoman said.

The Financial Times reported on Wednesday that the US Federal Reserve and Department of Justice were conducting the investigation, citing several people close to the situation. It cited a person familiar with the situation as saying one risk manager had already left the bank following the internal review.

RBS, which is 82 percent-owned by the taxpayer, declined further comment.

A spokesman for the Federal Reserve said it could not "comment on supervisory matters pertaining to individual institutions". A representative at the Justice Department did not respond to a request for comment.

Standard Chartered last week agreed to pay $340 million to the New York bank regulator over transactions linked to Iran. The British bank had been accused by the New York Department of Financial Services of concealing $250 billion in Iranian transactions.

In 2010, RBS agreed to pay $500 million to settle similar allegations by U.S. federal authorities that ABN Amro, a Dutch bank RBS acquired in 2007, had violated US sanction laws.

Analysts expect RBS to settle with US and UK regulators over its involvement in the Libor scandal later this year. It has also endured problems on the domestic front, with a computer systems failure causing massive disruption to customers in June.

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