US probe RBS over Iran

Royal Bank of Scotland is being investigated in the United States for possible breaches of sanctions with Iran, it emerged today.

The Federal Reserve and Department of Justice in America is looking at potential infringements after RBS volunteered information to US and UK regulators around 18 months ago.

News of the probe comes just a week after Standard Chartered agreed a $340m (€274m) settlement with regulators over allegations that it hid $250bn (€201m) of transactions with the Iranian government.

Part-nationalised RBS discovered possible breaches after an internal review launched by chief executive Stephen Hester soon after he joined the bank three years ago.

It is thought the bank’s own internal inquiries have already led to the departure of a senior risk manager, according to a report in the Financial Times.

RBS declined to comment but said in its half-year results report earlier this month that it had “initiated discussions with UK and US authorities to discuss its historical compliance with applicable laws and regulations, including US economic sanctions”.

Investigation costs or any action it may be required to take by regulators could have a “material adverse effect” on group earnings, it added at the time.

Regulators are said to be examining a number of banks globally amid oncerns of illicit dollar transactions with Iran ahead of the introduction of strict rules in the US in 2008.

Standard Chartered was accused by the New York State Department of Financial Services (DFS) of keeping around 60,000 transactions secret from US regulators over nearly 10 years.

But Standard, which employs 2,100 staff in the UK, maintained that it “strongly rejects” the portrayal by the DFS despite agreeing a settlement.

The RBS investigation is thought to centre on far smaller potential breaches.

However, it deals yet another blow to the group after it has already been marred this year by an embarrassing IT failure, mis-selling of retail and small business products and, more recently, involvement in a US legal case on alleged rigging of the Libor interbank rate.

RBS, HSBC and Barclays were last week among seven banks globally summoned for questioning by the attorneys general of New York and Connecticut as part of a Libor inquiry.

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