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Standard Chartered UAE Kicks Out Clients

PUBLICATIONS / Newsletters / 2014 / Newsletter October

Standard Chartered UAE Kicks SME Clients Out Of The Front Door

On the 7th of October 2014 the SME clients of Standard Chartered UAE received a letter.
It stated: “we regret to notify that Standard Chartered UAE will no longer be able to provide banking services to you, and your account(s) will be closed 30 days from the date of this letter”
Thank you very much.
What made one of the more successful international banks in the UAE send such a notice. Loyal clients, some of whom had been banking with them for over 10 years and who have businesses depending on their ability to pay and have mouths to feed?
They were forced to do it. By Whom?
The New York Department of Financial Services (DFS).

Standard Chartered UAE ‘s Regulatory Disputes

You must be wondering, what has the DFS have to say about a bank in a foreign country?
The new punishment came two years after the bank paid US regulators $667 million to settle charges it violated US sanctions by handling thousands of money transactions involving Iran, Myanmar, Libya and Sudan.
The DFS appointed a monitor in 2012 to keep an eye on the bank. And this monitor discovered that SCB had not detected allegedly high-risk transactions, originated from Hong Kong and the UAE. Or it at least failed reporting them as it should have.
Because Standard Chartered UAE failed to live up to its commitments, the DFS hit Standard Chartered Bank with a $300 million fine and restrictions on its dollar-clearing business for not detecting possible money laundering.
All of course in the name of “helping prevent terrorism and vile human rights abuses”.
Question. Please go over those lines again and pinpoint the most important piece of text.
Ok, it is this: “restrictions on its dollar-clearing business”.
The only way that the US is able to force this draconian regulations on banks around the world is exactly because all USD payments have to be cleared in New York. And without being able to clear USD’s, a bank will go bust. And the US is not afraid to use it.
That the outcome of this policy will likely not be as intended (the West monitoring and controlling all transactions worldwide) we described in the last month’s article: Russian Swift – A Likely Future.

What will happen next with Standard Chartered UAE?

“The group has decided to exit part of its SME business in the UAE as part of its broader efforts to sharpen its strategic focus, exiting non-strategic businesses, including those where increased regulatory costs could undermine their economic viability,” SCB confirmed to Khaleej Times.
The bank has been forced to let go of its SME clients because it cannot afford the regulatory burden that has been placed on them by a foreign entity. Following an endless stream for the financial services that are simply shut off for the small and medium sized international business owner because the costs of due diligence become so high.
To make sure that the opening of your own bank accounts go as smoothly as possible please read the article Things To Consider When Opening Your Corporate Bank Account.
Please read our updated RAK Offshore and UAE Free Zone page to discover which free zone companies we usually advice our clients. And more importantly, why.
If you want to talk to someone about banking in the UAE, please Contacts Us.

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