Tuesday, August 14, 2012

Regulatory Overlap

If three regulators, who serve you,
Have the same foreign bank in their purview,
Then one of that lot
May find the bank's not
So compliant, in his or in her view.

The one who would fulminate justly
To enforce all the statutes robustly,
Will doubtless surprise
The other two guys,
Who are only as tough as they must be.

In a case of awkward regulatory overlap, New York state's new financial regulator reached a high-profile settlement of Iranian money laundering allegations while federal authorities are still conducting their own, quieter investigation. British bank Standard Chartered has paid $340 million to the New York State Department of Financial Services to settle charges that it laundered money for Iran and lied about it to regulators. New York's chief banking regulator Benjamin Lawsky spoke of $250 billion in illicit transactions over a ten-year period, though the Fed, Treasury and the Justice Department consider the scope of the violations to be far smaller. For its part, Standard Chartered would only admit to about $14 million of money transfers in violation of federal law. Mr. Lawsky's noisy threats to revoke the bank's state charter roiled the waters with federal regulators, who accuse him of overstepping his bounds, and their British counterparts, who object to the tarnishing of their banks' reputations.

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