NEW YORK - New York's top bank regulator threatened to strip Standard Chartered of its state banking license, saying the British bank was a "rogue institution" that hid $250 billion in transactions tied to Iran, in violation of US law.The New York State Department of Financial Services (DFS) said Standard Chartered "schemed" with the Iranian government and hid from law enforcement officials some 60,000 secret transactions to generate hundreds of millions of dollars in fees over nearly 10 years, also exposing the US banking system to terrorists, drug traffickers and corrupt states. The loss of a New York banking license would be a devastating blow for a foreign bank, effectively cutting off direct access to the US bank market. Standard Chartered processes $190 billion every day for global clients, the New York bank regulator said.In an unusual look inside a bank, the regulator described how Standard Chartered officials debated whether to continue Iranian dealings. In October 2006, the top official for business in the Americas, whom the regulator did not name, warned in a "panicked message" that the Iranian dealings could cause "catastrophic reputational damage" and "serious criminal liability."A top executive in London shot back: "You f---ing Americans. Who are you to tell us, the rest of the world, that we're not going to deal with Iranians." The reply showed "obvious contempt for US banking regulations," the regulator said.In a statement, Standard Chartered said the bank "does not believe the order issued by the DFS presents a full and accurate picture of the facts."It said it shared with US agencies an analysis that demonstrated it "acted to comply, and overwhelmingly did comply" with US regulations. Standard Chartered put the total value of Iran-related transactions that did not follow regulations at less than $14 million."The group was therefore surprised to receive the order from the DFS, given that discussions with the agencies were ongoing," Standard Chartered said. "We intend to discuss these matters with the DFS and to contest their position."The DFS declined further comment. The Representative Office of Iran in Washington was not immediately available to comment. The Treasury Office of Foreign Assets Control, which enforces US economic and trade sanctions against targeted countries, declined to comment.The New York regulator, headed by former prosecutor Benjamin Lawsky, ordered Standard Chartered to explain why the bank should not lose its state license and the ability to process dollar transactions. Lawsky also ordered the bank to bring in an outside consultant to monitor its transactions."Standard Chartered Bank operated as a rogue institution," Lawsky said in the order.Deloitte citationIn an unusual move, the regulator also found fault with an outside consultant -- Deloitte -- because the firm "apparently aided" the bank in its deception.A report by Deloitte "intentionally omitted critical information" when submitted to regulators, it said.Deloitte was hired to conduct a review after Standard Chartered in 2004 was ordered by New York and federal regulators to correct anti-money laundering lapses.The so-called "look back" review was supposed to identify suspicious transactions between 2002 and 2004. But at one point, Standard Chartered asked Deloitte to "delete" references to certain improper Iranian transactions, according to the New York order.In a subsequent email, a Deloitte partner said the firm had "agreed" to the request because it was "too politically sensitive for both (Standard Chartered) and Deloitte. That is why I drafted the watered-down version." In 2007, that report enabled Standard Chartered to show regulators it had corrected flaws in its anti-money laundering systems.In a statement on Monday, Deloitte said its financial advisory service division "performed its role as independent consultant properly and had no knowledge of any alleged misconduct by bank employees. Allegations otherwise are unsupported by the facts."Altered documentsLawsky said Standard Chartered moved money through its New York branch on behalf of Iranian financial clients, including the Central Bank of Iran and state-owned Bank Saderat and Bank Melli, that were subject to US sanctions.Monday's order alleged that Standard Chartered removed codes on money transfers and altered message fields, inserting phrases such as "NO NAME GIVEN" to hide the nature of the transactions.At the center of concern were alleged "U-Turn" transactions, involving money moved for Iranian clients among banks in Britain and the Middle East and cleared through Standard Chartered's New York branch, but which neither started nor ended in Iran.Such transactions were permissible until November 2008, when the Treasury Department prohibited them on concerns that they were being used to evade sanctions, and that Iran was using banks to fund nuclear and missile development programs.The New York order also alleged that even as some banks exited the U-Turn transactions, Standard Chartered hustled to "take the abandoned market share." In a December 2006 memo titled, "Project Gazelle, Report on Iranian Business," bankers discussed how to increase "wallet share" with Iranian clients.Standard Chartered's stock fell 8 percent in late Monday trading in London amid reports of the US probe.