It was one of the select band of banks to characterise themselves as being a cut above the rest, having survived the financial crisis relatively unscathed without the need for bailouts.
To varying degrees, Barclays, Clydesdale, HSBC and Standard Chartered all took a "holier than thou" position, seeking to distinguish themselves from tainted brands such as Royal Bank of Scotland by insisting they had avoided scrapes, made fewer reckless decisions pre-crisis, were still lending as usual and had conducted themselves properly by adhering to good corporate governance.
But then came the bombshell from left field: the New York State Department of Financial Services accused Standard Chartered of laundering $250 billion for the state of Iran and other Iran-based clients over a 10-year period which, the regulator said, "left the US financial system vulnerable to terrorists, weapons dealers, drugs kingpins and corrupt regimes, and deprived law enforcement investigators of crucial information used to track all manner of criminal activity".
The August 6 order, signed by Benjamin Lawsky, superintendent of the US state department of financial services, was unequivocal. It said: "For almost 10 years, SCB [Standard Chartered Bank] schemed with the government of Iran and hid from regulators roughly 60,000 secret transactions, involving at least $250bn, and reaping SCB hundreds of millions of dollars in fees."
Richard Meddings, Standard Chartered's executive director, was quoted using expletives to disparage America's insistence on an economic blockade of Iran. He told an official in the bank's New York branch:. "You f***ing Americans. Who are you to tell us, the rest of the world, that we're not going to deal with Iranians?"
The revelations, which make a mockery of Standard Chartered's recent TV advertising campaign and chief executive Peter Sands's insistence that it was whiter than white, caused the bank's shares to plummet, though they recovered to some extent. Sands sought to play down the quantity of illicit transactions, but one institutional investor in the bank was underwhelmed by its efforts to extricate itself from the hook, saying: "Even if it is only $14m, they have still committed a crime, and they are still guilty."
The revelations – along with the possible loss of Standard Chartered's New York operating licence – were incredibly damaging and ruining all the good work that the current management had done in recent years, according to Nic Clarke, banks analyst at broker Charles Stanley.
Some have sought to minimise the severity of the New York ruling by arguing that Lawsky is driven by personal ambition. Frances Coppola, a former senior NatWest and RBS banker who now blogs at Coppola Comment, said the New York State order reflected competition between US regulators and their tendency to single out non-US banks rather than domestic players. She described the US regulatory system as fragmented, systemically biased towards its own financial institutions and tending to lean towards regulatory avoidance.
But William K Black, professor of economics and law at the University of Missouri-Kansas City and a former US financial regulator, said arguments about regulatory mission creep were a red herring. He stressed that anyone who fell for the "good" banks' spin, to the effect that some were on a higher moral plane, was rather gullible.
"What you have in the UK, as we have in the US, is that banks have been able to gain a competitive advantage by cheating," he said. "Bad ethics inevitably drove out good ethics, which gave rise to a pervasive rottenness and not just a few bad apples.
"For at least a decade that was accompanied by light-touch regulation, and an environment in which regulators had zero desire to enforce 'white collar' criminal laws."
He welcomed the fact that regulators such as Lawsky seemed committed to breaking apart such cosy relationships which, he argued, persisted at US federal regulators including the Securities & Exchange Commission and Federal Reserve.
So how can the UK deal with the pervasive malfeasance that appears to have infected its entire banking sector – and which is probably a legacy of the Milton Friedman-esque insistence on the supremacy of shareholder value and the switch from a service-led to a sales-led culture in the 1980s and 1990s?
The measures introduced so far, such as proposals from Sir John Vickers's Independent Banking Commission for the ring-fencing of UK banks' retail arms from their "casino" investment banks, and the parliamentary commission to be chaired by Andrew Tyrie MP, are seen as inadequate by most campaigners for financial and economic reform.
Other measures including support for the banking sector in the shape of near-zero interest rates, quantitative easing, and funding for lending from the European Central Bank and the Bank of England, are also seen as misguided on the basis that they serve only to prop up a morally bankrupt financial system.
Paul Moore, former head of group regulatory risk and the so-called HBOS whistleblower who last month set up the New Wilberforce Alliance to campaign for economic and financial reform, said: "The whole banking system is broken and needs total reform.
"We need a fully transparent, forensic, no-holds-barred inquiry in which everyone with a vested interest in further cover-ups, which includes existing and past politicians, existing and past regulators, any City of London grandee, must be barred from taking part other than as a witness. It should be presided over by three judges and three ordinary British people voted onto the tribunal."
He went on: "I am a huge fan of Conservative MP Andrew Tyrie but his commission is not going to work. In the light of recent revelations and the post-crisis whitewashes and cover-ups, hardly anyone in the UK trusts the politicians, the government, the regulators to handle this toxic timebomb any more."
Among solutions proposed by the alliance and the campaigning group, Fair Pensions, include the fiduciary duties of the directors of publicly quoted companies, including banks, being amended to encompass public duties. Moore said: "There should be a legal obligation not to focus solely on destructive goals such as short-term profit and share price maximisation."
Moore – who also favours a return to full-reserve banking, where banks must retain the funds of each depositor in reserve – added: "We should also be looking to cut off the heads of the hydra that the banking issue has become, by breaking up the banks into smaller units, creating regional, credit-style banks.
"There has to be a deconstruction of the 'too big to fail' institutions and a firm enforcement of the split between their retail and casino arms. That will ultimately deprive the casino arms of the ability to borrow speculative capital for the purposes of gambling in world markets."
Jim Lindsay, chairman of the independent Airdrie Savings Bank and president of the Chartered Banker Institute, agrees. He said: "From a purely logical perspective there must be some benefit in breaking 'too big to fail' banks down into more manageable chunks in order to ensure that management has a tighter grip over what's going on."
But what about the $1.2 quadrillion of outstanding derivatives contracts that are still floating so dangerously around the global financial markets? It was the exponential growth of derivatives, including basic products such as futures and options, as well as more complex "bets" on future financial outcomes and the infamous bundles of toxic debt known as collateralised debt obligations, that caused the financial crisis, then became impossible to sell and therefore worthless. How do you neutralise them?
Moore said: "Proprietary trading is an abuse of a dominant position in information, often generated through conflicts of interest, mathematics, and computer science."
He said the gradual unwinding of speculative positions should be handled along similar lines to the decommissioning of a superannuated nuclear power station. "If there are a lot of dead bodies in a house you have to dig them up and you have to deal with them. It's a matter now of bringing out your dead."
RBS chief executive Stephen Hester recently accepted that there might still be some horrors along the lines of the Libor-rigging scandal lurking in the rapidly diminishing Gogarburn-based empire.
Lindsay suggests that the process of owning up to past malfeasance, if there is more to come out, is something banks should do sooner rather than later. "It would be better if everything of that ilk could emerge now. You can't have something that happened five years ago coming out in a further five years. It would be better for all of us if that comes out now."
However, he said the primary focus of the Chartered Banker Institute is on change from within: "If trust is to be re-established in the banking sector, we need a sustainable foundation of professionalism." That was why the institute had launched the Chartered Banker Professional Standards Board last October, he added.
Lindsay said the chairmen and chief executives of all nine of the major UK clearing banks have signed up and agreed to fund its development. The goal is to try to bring back elements of the culture, which has evaporated since the 1980s, that bankers are professionals who need qualifications. The standards, which are still in development, aim to measure individual bankers' ethical awareness, their customer focus and their professional and technical integrity. He said: "The goal is nothing less than a reinvention, a reinvigoration of our banking profession."
Others have harsher medicine. Black at the University of Missouri said it was essential that all bankers who had broken the law, faked accounts, defrauded customers, and opened their doors to pariah states were banished from the industry. He said: "You need to get rid of the old scum who told us they were leading us in a dance but who were actually leading us to a disaster. The critical thing is that they are removed from office and disgraced. Trying them all might be too difficult."
Rowan Bosworth-Davies, a former Scotland Yard fraud squad officer and head of investigations at FSA predecessor FIMBRA, said: "We need a groundswell of popular pressure to ensure governments realise they can no longer get away with sweeping bank crimes under the carpet.
"David Cameron and George Osborne could start off by refusing to attend City lunches and dinners – along similar lines to what we did to the South African cricket team in the apartheid era. We need them to say, 'We're not going to be part of your ceremonies and shibboleths. You people are beyond the pale.'"