The Royal Bank of Scotland Group plc
) 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.
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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.
), 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
Standard Chartered PLC
) 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
) 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
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