HSBC fined £1.2bn over drugs & al-Qaeda money laundering


HSBC is set to stump up a £1.2bn fine as punishment for allowing Mexican drug cartels to launder billions of dollars through its US operations, and help fund al-Qaeda and other terrorist groups.

The settlement – which includes a Deferred Prosecution Agreement (DPA) with the US Department of Justice - was made following a damning US Senate committee probe earlier this year.

The investigation - which included a review of 1.4m documents and interviews with 75 HSBC officials and bank regulators - found that it had transferred billions of dollars of cash from its affiliate in Mexico to the US, despite warnings that such sums were likely to involve narcotics proceeds. US officials said they believed drug cartels – responsible for a continuing wave of murderous violence across Mexico - laundered illicit funds through the bank's US division between 2002 and 2009.

The British-based financial institution’s move follows hot on the heels of fellow UK operator, Standard Chartered bank, which coughed up £415m to US regulators to settle allegations it broke sanctions with Iran.

Europe’s largest bank by market said it has now changed its senior management and dramatically strengthened its compliance with new rules to prevent money laundering.

Stuart Gulliver, HSBC’s group chief executive, said:

‘We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again. 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.’

‘While we welcome the clarity that these agreements bring, ensuring the highest standards wherever we do business is an ongoing process. We are committed to protecting the integrity of the global financial system. To this end we will continue to work closely with governments and regulators around the world.’

At the time of the probe, Carl Levin, chairman of the Senate investigations panel, also criticised the federal agency supervising the bank's US operations - Office of the Comptroller of the Currency - saying it ‘tolerated’ HSBC’s weak controls against money laundering.

‘The culture at HSBC was pervasively polluted for a long time,’ said Levin.

In a statement, HSBC said it had increased its anti-money laundering staffing levels “nearly ten-fold” between 2010 and 2012.

Published 11 December 2020

SOURCE: CCH Online