The Department of Financial Services alleged that SCB systematically hid $250bn worth of Iranian client transactions, carried out over 10 years.
Standard Chartered admitted that some of their transactions did break US sanctions, but said the amount totalled just $14m.
The bank had been threatened to lose its US banking licence and according to investors, this settlement has removed that risk.
”The New York State Department of Financial Services (DFS) and Standard Chartered Bank have reached an agreement to settle the matter raised in the DFS order dated August 6, 2012,” a statement from the regulator’s superintendent said.
“The parties have agreed that the conduct at issue involved transactions of at least $250bn.”
A short statement from the bank simply confirmed a settlement of $340m had been reached and said that “a formal agreement containing the detailed terms of the settlement is expected to be concluded shortly.”
In addition to the penalty, there will also be a monitor at the bank’s New York branch for at least two years, who will evaluate money laundering controls and report directly to the regulator.
The settlement has also helped in the recovery of investor confidence in the bank, with the bank’s shares opening 4.3% higher in London trade before easing slightly.