India’s anti-money laundering agency, Enforcement Directorate (ED) fined Standard Chartered Plc 100 crore rupees (US$13.6 million) for breaking foreign exchange rules when it worked on the takeover of a local bank, Tamilnad Mercantile Bank. This marks one of the country’s biggest penalties imposed on an overseas lender.
Standard Chartered Plc is a London based British multinational banking and financial services. It operates a network of more than 1,200 branches and outlets across more than 70 countries.
An eight-year probe found that Standard Chartered violated the foreign exchange management act (FEMA) which monitors offshore financial transactions. When it worked with a group of investors to buy a stake in Tamilnad Mercantile Bank Ltd in 2007, according to an August order from India’s enforcement agency.
“Senior officials at Standard Chartered saw an investment in TMB shares as an opportunity that might ripen into an eventually larger ownership for the bank,” Sushil Kumar, the enforcement agency’s special director, said in the order.
“Standard Chartered through its affiliate Subcontinental was a proposed and eventually an actual investor in TMB shares to be purchased through the escrow agreement arrangements,” Kumar said.
The case dates back to about 13 years ago when Tamilnad Mercantile transferred 46,862 shares to overseas investors, including GHI Ltd, Swiss Re Investors, FI Investments and Cuna Group, without seeking permission from India’s central bank, according to the order.
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Source: Bloomberg
