Standard Chartered Signs Pact With New York Regulator

8:51 p.m. | Updated

Standard Chartered, the British bank accused of illegally funneling money for Iranian banks and corporations, signed a settlement on Friday with New York State’s top banking regulator.

Bank executives agreed last month to pay $340 million to settle claims that Standard Chartered moved hundreds of billions of dollars in tainted money and lied to regulators. Until Friday, however, the final details had not been hashed out.

The final agreement allows the 150-year-old bank to move beyond its clash with Benjamin M. Lawsky and the agency he heads, the 11-month-old New York Department of Financial Services. The state regulator moved alone to accuse Standard Chartered in August of working for nearly a decade with Iran to hide from regulators 60,000 transactions worth $250 billion.

In the harried days after Mr. Lawsky threatened to revoke Standard Chartered’s banking license, executives with the bank, whose stock was battered after the accusations, scrambled to reach some agreement with the state regulator. The bank’s chief executive, Peter Sands, flew to New York from London to help reach a deal in August.

Friday’s agreement solidifies the terms of the initial settlement that was announced on Aug. 14. Standard Chartered has agreed to pay the fine, which is a huge sum for a single state regulator. The $340 million will go entirely to Mr. Lawsky’s department and then into the state government’s general fund.

Under the terms of the settlement, the bank will also install a person for at least two years to scrutinize the bank’s money-laundering controls and put in permanent officials who will audit the bank’s internal procedures.

Other authorities, including the Manhattan district attorney and the Justice Department, have their own investigations into Standard Chartered’s activities. The bank is expected to resolve any criminal allegations with the prosecutors by next week, according to law enforcement officials. The settlement amount is still being debated, law enforcement officials said.

Standard Chartered had maintained that only $14 million of the $250 billion in transactions violated federal regulations. Until 2008, federal law permitted foreign banks to transfer money for Iranian clients through their American subsidiaries to another foreign institution.

In conversations with federal and state prosecutors, lawyers for the bank have argued that a large majority of the transactions under scrutiny fell squarely into that loophole, according to law enforcement officials. Noticeably absent from Friday’s settlement was whether Standard Chartered admitted or denied wrongdoing.

While the bank acknowledges that it processed 59,000 transactions valued at roughly $250 billion, Standard Chartered does not say those transfers violated federal law. The omission is important as federal and state prosecutors determine the extent of the wrongdoing, according to people close to the bank.

In the weeks before Mr. Lawsky’s action against the bank, Justice Department officials had concluded that the bulk of the transactions at issue had complied with United States law, current and former authorities said.

Mr. Lawsky based his case against the bank, in large part, on claims that it had violated state law by masking the identities of its Iranian clients, lying to regulators and thwarting American efforts to detect money laundering.

Those claims against the bank started an international firestorm that put the regulator into the spotlight. The accusations also pitted Mr. Lawsky against federal authorities who thought he was overstepping his bounds and British authorities who accused him of damaging the reputation of their banks.