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Money laundering: HSBC to pay $1.9 bln fine

Source : IBNS
Last Updated: Tue, Dec 11, 2012 17:11 hrs

Europe's biggest bank HSBC on Tuesday said that it will pay a record $1.92 billion to settle allegations resulting from a wide international money-laundering probe by U.S. federal and state authorities.

HSBC Holdings admitted to a breakdown of controls and apologised in a statement on Tuesday announcing it had reached a deferred-prosecution agreement with the US Department of Justice

"We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again," said HSBC Group Chief Executive Stuart Gulliver in a statement released early Tuesday.



"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."

The British banking giant´s money laundering compliance department, which included employees in India, was highly inadequately staffed, a year-long probe by the US senate´s permanent subcommittee on investigations found.

Deficiencies were also found in the quality of the work done by HSBC´s offshore reviewers in India, who were used for clearing a major backlog of suspected transaction alerts at the bank, media reports citing the probe have said.

The 340-page investigation report, which was released in July, found HSBC to have used its US bank HBUS as a gateway into the US financial system for clients while "playing fast and loose with US banking rules," Senator Carl Levin, the chairman of the subcommittee, said.

The controversy also resulted in the resignation of David Bagley, a top compliance executive at HSBC since 2002, who admitted to massive shortcoming in the bank's anti-money laundering operations.

The move came after the Senate investigative committee lambasted a "pervasively polluted" culture at the bank in

The report that came after a year-long inquiry said that British bank routinely acted as a financier to clients routing funds from the world´s most dangerous corners, including Mexico, Iran and Syria.

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