Venable partner Ed Wilson was quoted in the October 2012 edition of the International Financial Law Review on the impact of Standard Chartered’s $340 million settlement with the NY Department of Financial Services over travel rule violations. The August 6 decision means uncertainty for banks in future dealings with state-level regulators, because regulators now have a precedent for pursuing claims involving the evasion of federal laws.
Wilson's analysis was "that the state regulators apparently are not working in concert with federal regulators. It means the foreign banks have to be more careful." He added that "foreign banks' liability can now come from a state regulator to which they may not have previously paid much attention."
In this landmark case, Standard Chartered was at fault for violating the so-called travel rule, which requires the primary originator and ultimate beneficiary of transactions to be included in SWIFT (Society for Worldwide Interbank Financial Telecommunication) data. Wilson explained that "the rule did not become fully effective until 2004 because computerised SWIFT communications had to be overhauled so both the originators and beneficiaries could remain on computer records from beginning to end." He clarified that "Standard Chartered is not an OFAC (Office of Foreign Assets Control) case, it's a books and records case. The reason is the Travel rule –they allegedly changed their originators and recipients."