HSBC ‘allowed’ money laundering
A “pervasively polluted” culture allowed HSBC to be used by clients in Mexico, Saudi Arabia, Iran and Syria, to launder dirty money around the world, says a US senate committee report.
The US Senate probe found that lax controls at HSBC allowed Mexican drug cartels to launder billions of dollars through the bank’s US operations. The US arm of Europe’s largest bank moved billions of dollars of cash from its affiliate in Mexico to the US, despite warnings that the money could have come from drugs proceeds.
The report also claimed that HSBC provided banking services to some lenders in Saudi Arabia and Bangladesh, that are believed to have helped fund al-Qaeda and other terrorist groups. Suspicious sums from Syria, the Cayman Islands and Iran were also moved through the bank
The federal agency responsible for bank regulation, the office of the comptroller of the currency, came under criticism in the report for “tolerating” the bank’s weak controls against such practices.
The damning report follows the scandal over the manipulation of the Libor inter-bank lending rate, and will cast another shadow over the reputation of the banking industry.
In the 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. Carl Levin, Senate investigations panel chairman
HSBC executives will appear at a Senate hearing later on Tuesday, and are expected to offer a formal apology for the hearings.
In a statement, they said: “We will apologise, acknowledge these mistakes, answer for our actions and give our absolute commitment to fixing what went wrong.” The bank added that it has since changed its senior management and will strengthen its compliance with rules to prevent money laundering.
Carl Levin, chairman of the Senate investigations panel, said the culture: “In the 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.”
He added: “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.”
The US Justice Department is conducting a criminal investigation into HSBC’s operations but has not said whether the bank is in settlement talks. The year-long inquiry reviewed 1.4 million documents and interviews with 75 bank officials and HSBC executives.