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* Identifies problems in computer surveillance system
* Expects fine, extension of 2-year monitoring period
* CEO says fine likely to be less than $340 million
* H1 pretax profit down 20 pct, in line with guidance
* Bank takes $175 mln hit for commodities fraud at Chinaport (Writes through with comments from CEO, details)
By Steve Slater and Matt Scuffham
LONDON, Aug 6 (Reuters) - Standard Chartered Plc has warned it faces another fine from New York's financialregulator for problems related to detecting transactionsvulnerable to money laundering, piling more pressure on theAsia-focused bank and its bosses.
The London-based bank said on Wednesday problems in itssurveillance system - part of its anti-money laundering systemsand controls - were likely to result in a fine, remedial actionand an extension of a two-year monitoring period.
The monitoring was imposed in 2012 after StanChart was fined$667 million by U.S. regulators for breaking U.S. sanctions byhiding transactions linked to Iran so they would not bedetected, which rocked the bank and heralded a series ofproblems in the last two years.
Chief Executive Peter Sands said the latest issues, whichhad been spotted by the New York regulator's monitor, wererelated to computer surveillance faults and were less seriousthan those it previously had to contend with.
"We do not believe the impact to be of the same scale as thevery different issues the group faced two years ago," Sands toldreporters on a conference call.
He said the financial penalty should be less than the $340million the bank paid to the New York regulator in 2012. It islikely to be more than $100 million, a person familiar with thematter said.
StanChart is not alone in feeling the heat from U.S.authorities for breaking sanctions and for broader conductmis-steps. European rivals HSBC, Barclays andUBS have all been hit and BNP Paribas wasfined a record $9 billion last month for breaching sanctionsrelated to Sudan and Iran.
But the latest revelation still comes at a bad time forStanChart, two years to the day since New York regulatorBenjamin Lawsky called it a "rogue institution" for the extentof its sanction busting.
Big losses in Korea, a slowdown in investment banking andthe impact of tougher regulations have halted its run of 10years of record earnings and some investors have called forchange at the top.
The bank last month rejected reports it had stepped upsuccession plans for its Chairman John Peace and for Sands, whohas been CEO for 7-1/2 years. It said its board was unitedbehind the two in restoring the bank to profitable growth.
FULL AGENDA
Sands said he had no plans to step down. "I have a job. Idon't have other plans and I have a very full agenda of thingson my plate," he said.
The computer problems relate to a failure to flag potentialillegal activity. Banks' systems should spot possible problemsand generate a suspicious activity report for the regulator. ButSands said a systems upgrade in 2007 did not strengthen thesurveillance process as well as it should have done.
StanChart disclosed the investigation as it reported a 20percent fall in pretax profit in the six months to the end ofJune to $3.3 billion.
The bank had warned in June that profits would be down byabout a fifth as its investment bank revenue was hit by weaktrading activity, and Sands said on Wednesday many of thedifficult conditions that hurt the financial markets unit in thefirst half had continued in July.
The bank said losses on bad loans had increased by $264million to just over $1 billion during the period after it tooka $175 million provision to cover commodities fraud in Chinarelated to problems at Qingdao port.
Qingdao has been at the centre of an investigation intofraud at metals warehouses. Sands said he did not think it waspart of a wider problem with commodities inChina.
Shares in StanChart were down 1.7 percent at 11.96 pounds by1135 GMT, in line with a weak European bank index. Itsshares are down 10 percent this year, compared with a flat bankindex, and last month fell to a two-year low.
Analysts said the weak results had been well flagged but theoutlook remained challenging. StanChart makes most of itsearnings in Asia, Africa and the Middle East and said it expectsprofits in 2014 to fall for a second straight year.
Its financial markets business and operations in Korea werethe main trouble spots in the first half. The bank made a $127million loss in Korea and has sold parts of the business, cutstaff, shut branches and refocused on international clients totry to turn around the business.
Group financial markets revenue fell 20 percent, mainly dueto sharp falls in foreign exchange trading and interest-ratetrading products.
"We are taking action to get us back on the track ofsustainable growth," Sands said, noting the bank had soldnon-core assets, cut costs, made changes in senior managementand changed its structure in an attempt to sharpen its focus. (Editing by Carmel Crimmins and David Holmes)
