(Bloomberg) -- The long-running U.S. investigation into Standard Chartered Plc's violations of sanctions laws -- which appeared settled in 2012 only to be reopened two years later -- is inching toward the finish line.
Investigators from the U.S. have been interviewing current and former employees of the London-based bank in recent months and are expected to wind down that process in the next few weeks, two people with knowledge of the matter said.
The U.S. is looking into whether Standard Chartered's violations of sanctions laws persisted after the 2000-2007 period covered by the initial investigation. Among the questions are whether the bank should have been aware of any more recent violations and brought them to regulators. Prosecutors are also trying to determine whether the bank's outside law firms encouraged it to not disclose any sanctions violations it did know about, people familiar with the matter have said.
Officials from Standard Chartered and the Justice Department declined to comment.
QuickTake Primer: Iran Revived by End of Sanctions, for Better or Worse
Standard Chartered shares rose 1.8 percent to HK$66.50 at 11:11 a.m. Thursday in Hong Kong. Over the past eight years, investigations of European banks that violated U.S. sanctions laws involving Iran, Sudan and other blacklisted countries have emerged as a major enforcement effort, generating billions of dollars for federal and state coffers.
Criminal Crackdown
Two years ago, Leslie Caldwell, chief of the Justice Department's criminal division, threatened to tear up deals that let banks avoid prosecution if the banks didn't fulfill those pacts to the letter. She made good on that threat with UBS Group AG last year, nullifying an earlier non-prosecution agreement after the bank voluntarily disclosed subsequent misconduct.
As a political appointee, Caldwell is one of many senior Justice Department officials, including Attorney General Loretta Lynch, expected to leave as Donald Trump prepares to be become president.
In its 2012 settlement, Standard Chartered acknowledged that it had violated sanctions against Iran, paying $667 million and entering into a deferred-prosecution agreement with the government. The bank said it had stopped doing business with known Iranian clients in 2007.
Scrutiny of Standard Chartered was renewed in 2014 when New York's Department of Financial Services fined the bank $300 million for continued weaknesses in its anti-money laundering controls for its U.S. operations. Later that year, the Justice Department and the office of Manhattan District Attorney Cyrus Vance Jr. reopened their probe into sanctions violations, and New York Attorney General Eric Schneiderman joined the case.
Spokesmen for the Manhattan district attorney, the New York attorney general and the Department of Financial Services declined to comment.
Deferred Prosecution
Beyond the monetary penalties and fines, a key concern for Standard Chartered would be whether prosecutors determine that the bank violated terms of its 2012 deferred-prosecution agreement, which would expose the bank to criminal charges and a possible guilty plea.
If the interviews with Standard Chartered employees reveal that some of the bank's activities amounted to misconduct, the Justice Department, Federal Reserve, New York district attorney and New York Department of Financial Services will enter into talks with the bank over a possible settlement and what kind of punishment might be meted out, the people said.
--With assistance from Keri Geiger To contact the reporters on this story: Greg Farrell in New York at gregfarrell@bloomberg.net, George Smith Alexander in Mumbai at galexander11@bloomberg.net. To contact the editors responsible for this story: Ben Scent at bscent@bloomberg.net, Sara Forden at sforden@bloomberg.net, Timothy Sifert
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