In April 2010, our cover story 'America’s legal reach' highlighted rising concerns about the willingness of US lawmakers to impose their own regulatory norms far beyond their borders. A lawyer from US firm Sullivan & Cromwell warned that, while foreign banks were unlikely to stage a rush for the exits, they might undertake a gradual strategic reappraisal of their presence in New York if the regulatory environment became too hostile.
Sullivan & Cromwell has since defended a growing number of foreign bank subsidiaries under attack from the rapidly multiplying US regulatory bodies. Last month, another was added to the list, when Standard Chartered faced a broadside from the New York Department for Financial Services (DFS). The DFS was created in 2011, just in case banks did not receive enough attention already from the Department of Justice, the Treasury’s Office for Foreign Assets Control, the Federal Reserve, the Office of the Comptroller of the Currency, the New York Attorney General, and the District Attorney of Manhattan, to name but a few. Standard Chartered had apparently been in touch with most of these bodies regarding its affairs in Iran for more than two years prior to the heavy-handed intervention by DFS superintendent Benjamin Lawsky. The bank’s decision to settle by paying a fine of $340m does not detract from the cumbersome and inappropriate nature of the process, but could the ultimate victim be New York rather than Standard Chartered?
