RiskFinancial CrimeHSBC to Apologise at Senate Hearing for Money Laundering

HSBC to Apologise at Senate Hearing for Money Laundering

Senior executives at HSBC, Europe’s largest bank, will apologise for failing to prevent potential money laundering activities when they testify before a US Senate subcommittee on 17 July, according to an internal memo released ahead of the hearing and what is expected to be a large fine.

“We will acknowledge and apologise for our past mistakes,” HSBC’s chief executive officer (CEO) Stuart Gulliver wrote to employees, whose contents were confirmed by a spokesman at the bank. “Our anti-money laundering (AML) controls should have been stronger and more effective, and we failed to spot and deal with unacceptable behaviour.”

US authorities have been investigating activity inside HSBC that took place between 2004 and 2010. Gulliver said that bank officials will take the opportunity at the forthcoming testimony to outline the measures that HSBC has taken to improve its internal risk management, which include a doubling of its compliance budget from US$200m to US$400m over the past two years and a restructuring of its global operations.

HSBC’s 2011 annual report revealed that fines relating to money laundering issues could be significant, and analysts have speculated that it could face a higher penalty than the figure of US$619m that Dutch bank ING agreed to pay to settle charges that it violated US sanctions by helping Iranian and Cuban companies move money through the US financial system.

Gulliver is not expected to attend next week’s hearing and Irene Dorner, CEO of HSBC’s North American operations, will seek to explain how its internal controls have been improved.

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