The New York banking regulator's accusation that Standard Chartered Plc hid $250 billion in transactions tied to Iran may bring fresh scrutiny on the outsourcing of sensitive functions by global financial institutions, especially to India.
Standard Chartered lost $16 billion in market value on Tuesday as its shares plunged after the New York State Department of Financial Services (DFS) threatened to cancel the British bank's state banking licence.
As part of its report, the regulator said the bank's failures included "outsourcing of the entire OFAC compliance process for the New York branch to Chennai, India, with no evidence of any oversight or communication between the Chennai and the New York offices."
The bank CEO used the 'f' word when asked about the US regulator's accusation... "who are they to tell us we can't trade with Iran?"
So banks can do whatever they want, regardless of the government?
Surely less regulation would solve this problem, but maybe the problem is not with regulations.
Maybe the problem is that this bank broke the law.
They lost $16 billion in market value? Wow.
Someone's pocket will be emptied, but I suspect it will not be anyone involved with the crime.