Americans are jaded by the size and shape of the financial crisis that ripped through banking in 2008.  Bernie Madoff, AIG, "too big to fail," Goldman Sachs, subprime lending, unfathomable derivatives, and underwater mortgages make it hard to work up much steam on yet another banking story.  And you could be forgiven for thinking a tome entitled "NY State Department of Financial Services in the Matter of Standard Chartered Branch, NY, NY" would be dull.  But Benjamin M. Lawsky, superintendent of the NY State Department of Financial Services, has written the banking equivalent of pornography.  (Words you never thought you'd read together, right?)

It is the disgusting description of how a British bank and its U.S. subsidiary conspired over a decade to allow Iran to evade U.S. banking sanctions, and how a well-known American consulting firm covered it up in an "independent report."

The shocker isn't the 60,000 secret transactions.  It isn't the more than $250 billion that Iran was able to acquire in contravention of U.S. law.  It isn't the hundreds of millions in fees raked off by SCB and Deloitte & Touche, or even the activity Lawsky says "left the U.S. financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes, and deprived law enforcement investigators of crucial information used to track all manner of criminal activity."

The shocker is how SCB pimped for the government of Iran.

Iran was not just a client to whom one owes the best effort within the law.  It was such a good and valuable (their words) client that the bank created an enormous, elaborate, and redundant system of falsification to protect the regime and keep U.S. regulators in the dark.  

According to the Lawsky report, the bank "ensured the anonymity of Iranian dollar clearing activities through SCB's New York branch by falsifying SWIFT payment directions."  SBC removed data and used false data to ensure that U.S. regulators from the Office of Foreign Asset Control (OFAC) didn't find Iran anywhere.

Transactions with the government of Iran are illegal, and even non-governmental transactions are subject to delay while U.S. regulators ensure that they meet the limited legal standard.  SCB's transactions were mainly of the first sort, but SCB's Chief Legal and Compliance officer concluded, according to Lawsky, "that any delay would be a 'deal breaker' in SCB's efforts to develop new business" with Iran, so it stripped reference to Iran from everything.  It was SCB's goal to become the "go to" bank for Iran.

The NY branch was kept out of the loop at first, but there were so many transactions that eventually the Americans became complicit in activities initiated by London.  By 2006, New York complained that it feared exposure both for reasons of its reputation "and/or serious criminal liability."  The response from the Executive Group Director in London was, "You f---ing Americans. Who are you to tell us, the rest of the world, that we're not going to deal with the Iranians?"

So much for Western solidarity on the big issues.

Under investigation in 2005 for other activities, SCB entered an agreement with banking regulators requiring an "independent consultant" to review all transactions for the period July 2002-October 2004.  Enter Deloitte & Touche.  In a move of dubious legality and zero ethics, D&T showed SCB officials the investigative work it did for other clients, revealing the specifics of what regulators were seeking.  That let SCB know that an honest review would end badly.  SCB asked D&T to eliminate references to its Iranian operations.  A D&T partner later "admitted that 'we agreed to SCB's request because this is too much and too politically sensitive for both SCB and Deloitte. That's why I drafted the watered down report.'"

A separate NY regulators' investigation on Iranian transactions from other banks produced a request that SCB supply 12 months of its own records.  Knowing there were more than 2,626 illegal transactions worth more than $16 billion, SCB's Head of Compliance in NY turned over only four days worth of records.

In 2009, the wheels began to come off the truck, and SCB was forced again to talk to NY State regulators.  In 2009, 2010, and 2011, SCB promised to behave and keep better records, but regulators found more and more discrepancies, and in 2012, Lawsky's office lost patience, announcing seven specific violations and requiring SCB to come to court to answer questions as to why its banking charter should not be revoked.

It should.

Iran is pursuing nuclear weapons capability in defiance of the U.N.  It threatens America's ally Israel both directly and with financial and military support to Hamas and Hezb'allah.  Iran also has the second-highest (to China) capital punishment rate in the world, including dozens of public hangings; homosexual behavior and adultery (based on men's testimony alone) is punishable by death; women are subject to assault by "modesty police"; demonstrators have been shot in the streets (the image of Nehda Sultan should emerge from your memory bank here); and the bloody regime of Bashar Assad receives Iran's open and adamant financial, political, and military support. 

The West is supposed to stand in opposition to all those things.

For those who believe -- and those who hope -- that economic sanctions can cripple the regime's race toward nuclear capability and possibly even aid in the regime's demise, the discovery that Western banks are providing money to the mullahs and lying to the Americans should be appalling and disheartening.  The same for those who believe Western institutions should see themselves as part of the West and part of the solution to the problems of the West.

For those who believe that sanctions will not suffice, this is why.

Benjamin Lawsky has written what should be the summer's blockbuster.

Shoshana Bryen is senior director at The Jewish Policy Center.  She was previously senior director for security policy at JINSA and author of JINSA Reports from 1995-2011.