US Senate slams HSBC over money laundering - The National money laundering questions

US Senate slams HSBC over money laundering – The National money laundering questions

The US senate has slammed HSBC for a pervasively polluted culture and a decade of lax internal controls that allowed money laundering by firms with links to alleged terrorists and drug traffickers in countries including iran, saudi arabia and mexico.

The bank acknowledged its failings and apologised before the senate yesterday.

Let me state clearly that we deeply regret and apologise for the fact that HSBC did not live up to the expectations of our regulators, our customers, our employees, and the general public. HSBC’s compliance history, as examined today, is unacceptable, said irene dorner, the president and chief executive of HSBC’s US business, in testimony before the senate investigations subcommittee.

HSBC had underestimated some of the challenges presented by its numerous acquisitions, said david bagley, the head of group compliance for HSBC.

A decade of global growth led to the british bank becoming europe’s biggest by market capitalisation.Money laundering questions

HSBC’s shares listed on the london stock exchange fell 0.9 per cent to 551 pence each prior to the beginning of the hearing.

In its annual report, HSBC said it might face criminal or civil enforcement action from regulators as a result of their investigations and could face significant penalties.

About 28,000 transactions worth US$19.7 billion (dh72.3bn) were identified by external auditors, which raised alerts, including 25,000 involving iran. About $367m in transactions are being investigated by US authorities to determine whether american laws were violated.

US authorities had previously cautioned HSBC in september 2010 for the weakness of its anti-money laundering policies, which identified a backlog of 17,000 suspicious transactions that had not been reviewed.

HSBC had also failed to adequately monitor $60 trillion in wire transfers, the report said.Money laundering questions

The senate’s report paid particular attention to HSBC middle east, which alongside its european counterpart is alleged to have employed systematic efforts to circumvent US sanctions on iran while obscuring critical details of the transactions to authorities.

The report indicates the middle eastern unit was at the centre of efforts to pressure HSBC’s US subsidiary into conducting iranian transactions that did not alert the filters of american authorities.

HSBC middle east was also linked via its affiliates to banks in saudi arabia which the US government alleges have links to organisations involved in terrorist financing.

Wherever it operates, HSBC takes compliance with the law very seriously, said a spokesman for HSBC middle east.

We maintain close relationships with regulators in each jurisdiction and invest a large and growing allocation of resources to support all efforts to implement strong regulatory standards.Money laundering questions

The senate’s report also pointed to prohibited transactions involving myanmar, cuba, north korea and sudan between 2002 and 2007 – although none on the same scale as the bank’s dealings with iran.

In an age of international terrorism, drug violence in our streets and on our borders, and organised crime, stopping illicit money flows that support those atrocities is a national security imperative, said carl levin, the senate subcommittee chairman.

If an international bank won’t police its own affiliates to stop illicit money, the regulatory agencies should consider whether to revoke the charter of the US bank being used to aid and abet that illicit money.


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