Standard Chartered has agreed to pay $340m to settle allegations that it hid $250bn in transactions with Iran from New York state regulators in violation of US sanctions.

The settlement was announced on Tuesday by New York's Department of Financial Services (DFS) and came less than 24 hours before the London-based bank was scheduled to defend itself against the allegations at a hearing in the US.

Under the terms of the settlement, the bank agreed to its transactions being monitored for two years and to appoint auditors to investigate compliance with US sanctions.

The Treasury Department told AFP news agency that the settlement would not halt its own investigation.

"Our investigation continues. Treasury will continue working with our regulatory and law enforcement partners to hold Standard Chartered accountable for any sanctionable activity that occurred," an official said.

The Department of Justice said it would also continue to "determine what actions might be appropriate".

Standard Chartered said its decision to agree to pay the $340m was a pragmatic one made in the best interest of shareholders and customers.

A spokesman for the bank said it remained in talks with other US regulators and that an announcement on the timing of any resolutions would be made in due course.

'Rogue bank'

Although the agreed upon cash settlement may appear to be steep, it is far from the worst-case scenario for the bank.

The DFS on August 6 branded Standard Chartered as a "rogue bank" and threatened to revoke its licence.

Since the allegations became public just over a week ago, the firm's shares have lost about 15 per cent of their value.

The allegations also thrust Standard Chartered into the centre of a major geopolitical dispute.

In the last decade, the US and its allies have ramped up sanctions against Iranian banks, institutions and individuals, accusing them of helping the government seek a nuclear weapons, repress rights and fund terrorism.

US authorities accused Standard Chartered of throwing the doors of the financial system wide open to "terrorists, weapons dealers, drug kingpins and corrupt regimes".

Source: Al Jazeera and agencies