Shares of Standard Chartered bank have tumbled despite the bank denying allegations that it illegally "schemed" with Iran to launder money.
Shares fell 15% in early London trade, after falling 7.5% in Hong Kong.The New York State Department of Financial Services said the UK-based bank laundered as much as $250bn (£161bn) over nearly a decade.
It said the bank hid transactions for "Iranian financial institutions" that were subject to US economic sanctions.
The regulator said that Standard Chartered had hidden 60,000 such secret transactions.
However, the bank denied the allegations saying that it "strongly rejects the position or portrayal of facts as set out in the order" issued by the regulator.
'Not a full picture' The US regulators labelled UK-based Standard Chartered a "rogue institution" and ordered the bank to "explain these apparent violations of law" from 2001 to 2010.
The regulator also said that it would hold a formal hearing over the "assessment of monetary penalties". The bank has also been threatened with having its US banking licence revoked.
However, the bank said the order issued by the US regulator did not present "a full and accurate picture of the facts".It said that it had conducted a review of its transactions, primarily those relating to Iran for the period between 2001 to 2007 and had given regular updates to the US authorities on the results of the investigation.
"As we have disclosed to the authorities, well over 99.9% of the transactions relating to Iran complied with U-turn regulations," the bank said.
"The total value of transactions which did not follow the U-turn was under $14m."
The so-called U-turns are started outside the US by non-Iranian foreign banks and only pass through the US financial system on the way to other non-Iranian foreign banks.
To ascertain whether these transactions are permitted or not under the current U-turn laws, US clearing banks use the wire-transfer messages they get from the banks involved.
If the banks do not have enough information, they are supposed to freeze the assets.
Penelope Lepeudry, managing director of Kroll Advisory Solutions, a consulting firm specialising in financial investigations, told the BBC that "if the allegations are confirmed this is a very serious development".
"The regulators are not going to be merely convinced by a statement from the bank - they need to see the details," she said.
"The bank will need to open up its books and back the statements with facts."
Other schemes found The allegations are far larger than those involving HSBC, which was recently accused by the US Senate of failing to prevent money laundering from countries around the world including Mexico and Iran.
It has set aside $700m to deal with any fines and penalties arising from those allegations.
The regulator said it had also uncovered evidence with respect to what are apparently similar schemes to conduct business with other countries under sanctions - Libya, Burma and Sudan.
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