RBS Probed Over Iranian Dealings - Analyst Blog
August 22 2012 - 1:15PM
Zacks
The Royal Bank of Scotland Group plc (RBS) is
the latest bank to be investigated by U.S. regulators over possible
violations of restrictions imposed on Iran. The Federal Reserve and
Department of Justice are the agencies involved.
According to the Financial Times, the investigation was
triggered 18 months after the Royal Bank voluntarily disclosed
information to American and British regulators to discuss
compliance with applicable laws and regulations. As the probe has
not been made public, the related details are not available.
This is not the first time that Royal Bank has been charged with
contempt of the U.S. laws and regulations. Earlier, in 2010,
ABN AMRO Holding N.V. (ABN), bought by Royal Bank
in 2007, was accused of money laundering. The regulators accused
ABN AMRO of funneling the money of countries accused of sponsoring
extremist activities through the U.S. financial system. This
compromised national security, and thus the bank was asked to pay a
fine of $500 million.
British Banks in Money Laundering Scam
Last week, Standard Chartered PLC (SCBFF) reached
a $340 million settlement with the New York State Department of
Financial Services (DFS) for its involvement in money laundering in
Iran. The agreement came after the London-based bank was accused by
New York’s top regulating authority of concealing transactions
worth $250 billion (£160 billion) relating to Iran.
Earlier this year, the top executives at HSBC Holdings
plc (HBC) faced a tough inquiry by a congressional
committee for their alleged involvement in money laundering during
the period 2004-2010. The investigation revealed substantial lapses
in the bank's anti-money laundering compliance. This resulted in a
worldwide displacement of funds from riskier nations through the
bank. Controversial transactions pertaining to its Iranian
clientele and the illegal narcotics trade in Mexico drew maximum
attention.
Conclusion
Since the investigation is still in the initial stage, it would be
too early to comment on the outcome. However, if penalized, the
financials of Royal Bank could be affected to an extent.
Currently, Royal Bank retains a Zacks #3 Rank, which translates
into a short-term Hold rating. Considering the fundamentals, we
also maintain a long-term ‘Neutral’ recommendation on the
stock.
(ABN): ETF Research Reports
HSBC HOLDINGS (HBC): Free Stock Analysis Report
ROYAL BK SC-ADR (RBS): Free Stock Analysis Report
(SCBFF): ETF Research Reports
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