HSBC was forced to apologise publicly today before the US Senate – and saw its compliance chief resign – over facilitating a multi-billion-dollar money-laundering operation for drug gangs, terrorists and rogue nations worldwide.
Britain’s biggest bank was “pervasively polluted for a long time” as it allowed funds to be shifted to and from its branches in the United States as far afield as Mexico, Syria, the Cayman Islands, Iran and Saudi Arabia, the hearing was told.
Issuing an apology, Stuart Gulliver, chief executive of HSBC, said: “We have sometimes failed to meet the standards regulators and customer expect… we take responsibility for fixing what went wrong.”
HSBC, the only British bank with US branches, is now braced for a “substantial” fine which analysts said could be up to $1bn (£640m). The latest banking scandal comes in the wake of Barclays’ £290m fines for its role in rigging Libor.
The hearing by the Senate’s Committee on Homeland Security was the culmination of a year-long investigation. Its 335-page report into HSBC saw the committee sift through 1.4m documents and interview 75 HSBC officials, as well as bank regulators. It highlighted damning examples of lax controls and inadequate compliance by staff at HSBC’s 470 US branches.
The bank allegedly ignored specific US measures designed to prevent transactions being made involving terrorists, drug lords and rogue regimes. Two HSBC subsidiaries, for example, processed 25,000 transactions over seven years, worth a total of $19.4bn, without disclosing that the cash had links to Iran. The bank is also alleged to have moved billions of dollars in cash from Mexican subsidiary HBMX to its US network – despite being warned by both US and Mexican authorities that such sums could only be linked to drug trafficking.
The report said that HSBC accepted more than $15bn in cash between 2006 and 2009 from Mexico, Russia and other countries at high risk of money-laundering but failed properly to monitor transactions. The bank even managed to label Mexico, ravaged by corruption and drug wars, as “low risk”, the committee said. HSBC also provided US dollars and banking services to banks in Saudi Arabia and Bangladesh despite apparent links to terrorist financing, according to the report.
David Bagley, HSBC’s global head of compliance who had worked at the bank for 20 years, today resigned in front of the committee. He admitted HSBC had “fallen short of our own and regulators’ expectations”.
Senator Carl Levin, who led the committee’s investigation, said HSBC’s lack of controls in America and abroad between 2006 and 2010 had been “a recipe for trouble”.
The report said many of the abuses occurred as a result of HSBC’s failure to monitor its so-called “bearer share accounts”, facilities that legally keep secret the owners and some transactions. At one stage the Miami branch had 1,670 bearer share accounts, holding $2.6bn of assets and generating revenues of $26m. Mr Levin told the hearing: “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.”
The chairman accepted HSBC had overhauled its systems since the failures were found and was “committed to cleaning its house”.
The investigation into HSBC is the latest US attempt to crack down on money-laundering. Last month, ING agreed to pay $619m to settle allegations that it broke American sanctions against Cuba and Iran.
HSBC boss quits for failing to stop money laundering – Telegraph.
Replies
The Banks...Banksters are nothing but Gangsters
Come on ..come on ..open up more Banks...in the end you will find that there is not a single Bank that is free from corruption...the only one free from corruption is a closed down Bank
I agree, Shaz....
When ever I speak of corrupt bankers I am certainly not including those frontline staff, such as Tellers, who are put under impossible pressures and paid peanuts, in comparison to their decadent bosses....
I certainly would not suggest that anyone take out their frustrations on frontline banking staff, who are not to blame for the awful state of affairs created by their managers...many of whom are overpaid, to the nth degree...
the tillers front line are not innocent like they know nothing ..they are aware that their bosses are on the fiddle and after some time they become a part of the corrupt system ...there may be few exceptions and they would probably leave...the front line are fed with info from their bosses and their inner self will tell them its motive is greed, power, corruption and control...where ever money is involved corruption is there to a certain percentage ..more money more security like the banks means more corruption...
on this Planet the way to live is.. simple living high thinking...meaning live simple, eat simple, dress simple but lead a highly spiritual tuned life
...yes.. but not all people have the guts, the strenght, or the ability to quit their bank jobs... when u have a family to feed and bills are running each month..its not so easy... specially with the "fear-insecurity system" that we have to deal with here... so, they zip it, and swimm...
the people who work in the banks, are as guilty as are the people who have money in the banks... now, question yourself...how many people keep money in the banks???
..also people who work in banks can be pretty cool guys....
http://pogpog.com/v/awesome-guard-makes-incredible-entrance/
(ok..maybe the above guys were not exactly bank-staff... but u get my drift... ;)
the stuff arent too blame;
the big rich bosses make the decision and pass it onto them to comply as their contract dictates, the staff at hsbc are lovely :) its the rich bosses who are stealing ! <3
The whole banking system is being unravelled as corrupt to the core and unfit for purpose...
If readers recall, the GFL have reported this for decades, long before the mainstream media belatedly tackled it....with recent examples of the same intrinsic corruption, coming to light now...However, better late than never and people should be rejoicing that the promises of reform are indeed true...As certainly, the current system cannot continue....it must END.
They say no stone will be left unturned and a lot more will be revealed ...prepare for more corruption being exposed.
Greed , power and control on this Planet are because of mainly money and religion..,untill both are removed there will be no peace on this Planet.
They say we are all one but on this Planet divided by money and religion.
does anyone trust BANKS OR THEIR STAFF...they are all involved..maybe just a few who are innocent...other BANKS CORRUPTION WILL BE REVEALED....