Standard Chartered, one of Britain’s most distinguished global banks, has been accused by United States regulators of laundering US$250 billion  from Iran and behaving like a “rogue institution”, in the latest catastrophic blow to the reputation of the City of London.

New York state’s Department of Financial Services accused the New York branch of the 160-year-old institution of leaving the US financial system “vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes” through its “flagrantly deceptive actions” between 2001 and 2010.

The regulator said the branch of the British bank had earned millions of dollars in fees by “conspiring” with Iran in about 60,000 “secret transactions”.

This behaviour, said the regulator, had been “motivated by greed” on the part of Standard Chartered.

The regulator said it had uncovered evidence of similar schemes by Standard Chartered to conduct business with Libya, Burma and Sudan, all of which, like Iran, have been subject to sanction by the US.

The bank has been threatened with having its US banking licence revoked and has been ordered to appear before the regulator soon to explain these apparent violations.

Last month a US Senate panel found British bank HSBC was used by Iranians looking to evade sanctions and by Mexican drug cartels. In June, Barclays was fined £290 million ($551.4 million) by British and US regulators after the bank admitted it had manipulated the Libor interest rate, which is used to set prices of loans around the world, to inflate the bonuses of traders in its investment bank.

The latest accusations are a potential disaster for Standard Chartered which was, until now, the only global British bank that emerged from the 2008 financial crisis with its reputation for financial prudence intact. Its chief executive, Peter Sands, has been one of the most vocal opponents of new regulations advanced in recent years to curb the financial sector’s excesses. He had even been suggested in some quarters as a successor to Sir Mervyn King as Bank of England Governor.

But the regulator said yesterday that the wrongdoing was sanctioned by the bank’s “most senior management”. It reported that one senior director, when warned of the US sanctions, had said: “You  Americans. Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians?”

The regulator laid out allegations of how Standard Chartered had falsified business records, obstructed regulators and failed to record transactions.