The New York State Department of Financial Services (DFS) says Standard Chartered "schemed" with the Iranian government for nearly 10 years, hiding around 60,000 secret transactions and picking up hundreds of millions of dollars in fees.

By helping Iranian banks to break US economic sanctions and then cover up the transgressions, the Standard Chartered New York branch "left the US financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes," says the DFS.

The bank is accused of conspiring with Iranian clients to route nearly 60,000 dollar transactions through the New York branch after falsifying Swift wire payment directions.

Says a statement: "When SCB employees determined that it was necessary to "repair" unadulterated payment directives, they did so by stripping the message of unwanted data, replacing it with false entries or by returning the payment message to the Iranian Client for wire stripping and resubmission."

When Standard Chartered's CEO for the America's decided to question the actions in 2006, the response from the group executive director in London was, according to a staffer: "You fucking Americans. Who are you to tell us, the rest of the world, that we're not going to deal with Iranians."

Shares in Standard Chartered plunged by more than 20% in morning trading in London on fears that the bank could now lose its US dollar clearing license.

In a statement, the bank says that it "strongly rejects the position or the portrayal of facts" set out in the DFS order, claiming that "well over 99.9% of the transactions relating to Iran complied with the U-turn regulations".

Earlier this year, under orders from the EU, Swift took the unprecedented step of cutting off its financial messaging network to Iranian banks subject to European sanctions.

The DFS is not the only New York-based body looking at banks and sanctions: the Manhattan district attorney's office has reached settlements worth hundreds of millions of dollars with Barclays, Lloyds and Credit Suisse over claims they falsified wire transfers destined for countries or individuals on US sanctions lists.

In July, HSBC's head of compliance David Bagley quit his post after ten years in the job as the bank was subjected to a stinging attack by US politicians over its use as a conduit for Mexican drug money and terrorist financing.