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Friday 22 August 2014

HSBC agrees $1.9bn settlement over money-laundering claims

Published 11/12/2012 | 08:12

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HSBC will pay more than one billion US dollars in forfeiture to settle a money-laundering inquiry in the US. Photo: Reuters

HSBC has said that it has agreed to pay US authorities a record 1.9 billion US dollars (€1.5 billion) settlement over accusations that it allowed rogue states and drug cartels to launder billions of pounds through its US arm.

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The US Senate findings against HSBC, which accused the bank of ignoring warnings and breaching safeguards that should have stopped the laundering of money from Mexico, Iran and Syria, led to the resignation of head of compliance David Bagley.

The lender reached agreement with several US authorities including the US Department of Justice and expects to soon finalise a deal with the Financial Services Authority.

HSBC group chief executive Stuart Gulliver said: "We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again."

The settlement comes after fellow British bank Standard Chartered said it would pay a further 327 million US dollars to settle allegations that it breached sanctions with Iran. The bank, which has already paid 340 million US dollars to New York's Department of Financial Services, was accused by regulators in August of exposing the US to terrorists and drug kingpins by hiding 250 billion US dollars of transactions with Tehran.

Earlier this year, a US Senate sub-committee found that the US arm of HSBC treated HSBC Bank Mexico, which transported seven billion US dollars in cash in armoured vehicles to the bank in 2007 to 2008, as a "low-risk" client. It offered banking services to HSBC Bank Mexico despite the country's troubles with money laundering and drug trafficking, high-risk clients, high-risk products, a secretive jurisdiction and weak anti-money laundering controls.

And foreign HSBC banks avoided safeguards designed to block transactions involving terrorists, drug lords and rogue regimes, the sub-committee said, while it also ignored links to terrorists, providing services to risky banks in Saudi Arabia and Bangladesh.

The revelations heaped pressure on Business Minister Lord Green, who was chairman of HSBC at the time the failings took place.

Unveiling the settlement, HSBC said that, in the past several years, the board has taken decisive action to direct management to "fix past shortcomings as they have come to light". It will now be monitored by the US Department of Justice for five years to ensure these changes are fully implemented.

Mr Gulliver added: "The HSBC of today is a fundamentally different organisation from the one that made those mistakes. Over the last two years, under new senior leadership, we have been taking concrete steps to put right what went wrong and to participate actively with government authorities in bringing to light and addressing these matters."

https://www.hsbc.co.uk/(HSBC)

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