Saturday, October 31, 2020

HSBC to pay US$1.9 billion to settle money-laundering accusations

The settlement means HSBC will now avoid US prosecution.

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HSBC has avoided a legal battle that could further dent its reputation and undermine confidence in the global banking system by agreeing to pay US$1.9 billion to settle a US money-laundering probe.

Europe’s largest bank will pay the biggest penalty ever imposed on a bank after facing accusations it transferred funds through the US from Mexican drug cartels on behalf of countries under international sanctions, such as Iran, the Associated Press reports.

Banks have been facing greater scrutiny since the financial crisis of 2008. A succession of unearthed banking scandals has highlighted lax oversight and a culture of arrogance and entitlement.

Last year, a US Senate investigation concluded that HSBC’s ineffective controls meant it became involved in money laundering and terrorist financing. HSBC affiliates also ignored US government bans on financial transactions with Iran and other countries.

Mexico sent around US$7 billion in cash to the US through HSBC. US regulators said such a large amount indicated illegal drug money.

Also, HSBC’s US division provided money and banking services to banks in Saudi Arabia and Bangladesh thought to have funded al-Qaida and other terrorist groups, the Senate report said.

HSBC conceded that its anti-money laundering measures had been inadequate.

“We accept responsibility for our past mistakes,” said HSBC chief executive Stuart Gulliver. He promised that HSBC would continue to strengthen its compliance policies and procedures.

The settlement means the bank will avoid prosecution in the US.

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