StanChart agrees extension of US sanctions scrutiny

StanChart said its US deferred prosecution agreements will now end at the same time as the independent monitor’s oversight on July 28, 2018. (Reuters)
Updated 10 November 2017

StanChart agrees extension of US sanctions scrutiny

LONDON: Standard Chartered said it faces a further extension of its US deferred prosecution agreements (DPAs) until July next year, in a sign it has yet to improve its sanctions compliance to the satisfaction of US authorities.
StanChart first entered into the agreements with the US Department of Justice and the New York County District Attorney’s Office in December 2012, accepting that it had broken laws by processing payments for sanctioned entities in countries including Iran, Burma, Sudan and Libya.
The bank avoided prosecution in exchange for a cash settlement of $327 million (SR1.22 billion) and an agreement with the US authorities to improve its sanctions compliance.
The DPAs were extended for a further three years in 2014, as StanChart sought to strengthen its controls under the scrutiny of an independent monitor tasked with reporting on its progress.
Reuters reported in September the likely extension of the bank’s US supervision, as sources at the bank said upgrading its technology worldwide to meet stringent US standards was proving a daunting task.
The monitor appointed to oversee StanChart’s settlement, Ellen Zimiles, global head of investigations at Navigant Consulting Inc. and a former prosecutor, has tested the software used by the bank and found that the bank’s processes missed millions of possible violations.
StanChart said on Thursday its DPA will now end at the same time as the independent monitor’s oversight on July 28, 2018.
“The agreement acknowledges that the Group has taken a number of steps and made significant progress to comply with the requirements of the DPA and enhance its sanctions compliance program, but that the program has not yet reached the standard required by the DPA,” it said.
In a deferred prosecution agreement a prosecutor agrees to grant amnesty in exchange for the defendant agreeing to fulfill certain requirements, and StanChart could face prosecution and further fines if it reoffends.
The bank is also being investigated over whether it continued to violate Iran-related sanctions after 2007, in violation of the deferred prosecution agreements between the bank and US state and federal prosecutors.
Thursday’s statement from the bank said it continues to cooperate with that investigation, but that more time is needed.
StanChart says it now spends more than a billion dollars a year on compliance, up more than 40 percent from 2014.

Dubai rents stabilize for the first time in two years

Updated 22 April 2018

Dubai rents stabilize for the first time in two years

  • Dubai rents unchanged in Q1, 3.1% lower year on year
  • But rental rates forecast to fall 5-7% in 2018 as new stock enters the market

Dubai residential rents stabilized for the first time in two years last quarter, according to real estate consultancy Cluttons, even as the imminent delivery of new rental stock is likely to further depress rates throughout the year.

Rental rates were unchanged for the first quarter of the year, Cluttons reported on Sunday, with 3.1 percent lower than the year-ago period. But rents are expected to fall by 5-7 percent over the remainder of the year, the consultancy forecast.

“We expect newly completed rental properties to command the attention of tenants, while older and more secondary property will register rent falls,” said Murray Strang, Head of Cluttons Dubai.

“This flight to quality phenomenon will likely result in the creation of a very distinctive two-tiered market. In the short-term, we expect rents to slip by up to 5-7% over the remainder of 2018.”

Sales values across the emirate’s residential market continued to slip in the first quarter, declining 2.5%, even as more affordable areas such as Discovery Gardens and International City were stable.

“One of the key factors that has likely contributed to the stability in values in Dubai’s more affordable residential areas is the distinct lack of new supply in these markets,” said Faisal Durrani, Head of Research at Cluttons.

“Affordability aside, We expect demand to remain firmly centered on new homes priced under 800 dirhams per square foot (psf) as affordability takes center stage in the market.”

Cluttons expects values to slip by up to 5 to 7 percent in 2018, with the decline persisting well into 2019, “catalyzed by the buoyancy of the supply pipeline.”

Office rents remained largely unchanged across the emirate, despite a 21 percent correction in upper limit rents in Bur Dubai. Such flat conditions are likely to continue through until the end of the year, Cluttons forecast, with free zone rates bucking the trend due to their desirability as submarkets.