Fordham Law


Video: Standard Chartered Stock Dives

Annemarie McAvoy in NBR, August 07, 2012

Media Source

SUSIE GHARIB: 

That Standard Charter money laundering scandal keeps getting bigger. Now the White House says the U.S. Treasury is closely monitoring the investigation of the UK bank. Standard Charter is accused of scheming with the Iranian government to launder $250 billion. The bank`s stock plunged 23 percent in London trading today.  So what happens next?  Here to answer that: Annemarie McAvoy, a former Federal prosecutor specializing in money laundering. She is now a professor at Fordham University law school.  Annemarie, what do you think is going to happen next? How much bigger is this going to get? 

ANNEMARIE MCAVOY, ADJUNCT PROF., FORDHAM LAW SCHOOL: 

This is only the beginning. This is going to get much bigger. There are going to be numerous investigations, not only the state but the Federal regulators will get involved, the Treasury Department is getting involved. They`re going to criminal investigations. The FBI is already investigating. There probably is going to be also an investigation of Deloitte`s involvement and whether they changed their reports on behalf of Standard Charter. It`s going to get very big and the fines are going to be huge. In the end, this is going to end with fines at the least. 

GHARIB: 

How big are those penalties going to be and is anybody going to end up in jail because of this? 

McAVOY: 

The penalties will likely be at least in the hundreds of millions of dollars. They could well be over a billion in this case because the conduct is so egregious and it was clearly very knowingly done by certain people at the bank. And because of that, there also is a good chance that people may actually wind up having criminal prosecutions against them individually and they may wind up going to jail as well. 

GHARIB: 

It`s not just Standard Charter. We`ve seen a string of banks behaving badly recently, the Barclay`s case, the LIBOR scandal and then another British bank, HSBC is said to have been involved in laundering money with the Mexican drug cartel and now this. At times like this people feel maybe it`s time for some tougher and more regulation. Is that the solution? 

McAVOY: 

It isn`t. There are lots of regulations and you can see they got Standard Charter with the regulations we currently have. So there are plenty of laws on the books.  There are plenty of mechanisms that law enforcement has and the regulators have to bring these banks into compliance. But the problem is you have a case like this, they really went around the regulations. They actually apparently faked information on wire transfers in order so that the regulators could not find it so easily. When you have a bank doing that, no matter what regulations you have, it`s going to be very hard to track them down. 

GHARIB: 

You heard Tom`s conversation just a moment ago about investor confidence and in a case like this it does undermine investor confidence and trust in the banking system. What do you think has to be done to restore that trust? 

McAVOY: 

Well, hopefully if the public sees that the government can go after the banks that misbehave as this one did so egregiously and makes them pay for what they`ve done, then the public will feel the government is watching, law enforcement is watching and the right thing will happen in the end and that will help.  And the other thing that will probably happen is that Standard Charter will probably settle relatively quickly. They`ll pay the fines and this will be out of the public`s mind again because it will be out of the press. 

GHARIB: 

We`ll be following all those headlines, thank you so much, Annemarie McAvoy, former Federal prosecutor and professor at Fordham law.