RiskFinancial CrimeHSBC to Pay US$1.92bn Fine to Settle Money Laundering Charges

HSBC to Pay US$1.92bn Fine to Settle Money Laundering Charges

HSBC said that it has agreed to a record US$1.92bn settlement with US authorities to settle allegations that its
anti-money laundering (AML) systems were lax
, enabling the transfer of billions of dollars for sanctioned nations such as Iran and for Mexican drug cartels to move money illegally through its US subsidiaries.

In a statement the bank said it had “reached agreement with US authorities in relation to investigations regarding inadequate compliance with AML and sanctions laws.” HSBC is also is expected to reach a settlement imminently with UK regulator the Financial Services Authority (FSA), according to reports.

“We accept responsibility for our past mistakes,’’ HSBC’s chief executive officer (CEO), Stuart Gulliver, said in a statement.  “We have said we are profoundly sorry for them, and we do so again. 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.

“While we welcome the clarity that these agreements bring, ensuring the highest standards wherever we do business is an on-going process. We are committed to protecting the integrity of the global financial system. To this end we will continue to work closely with governments and regulators around the world.”

According to a US Senate committee report, HSBC transferred US$7bn in cash from Mexico to the US in 2007 and 2008. The settlement is reported to comprise around US$1.25bn in forfeiture and US$655m in civil penalties. In addition, HSBC said that it had also spent nearly £200m on remedial measures to overhaul its compliance function.

The deal follows the announcement of a similar, but smaller settlement between the US authorities and Standard Chartered bank, which is paying US$300m in fines for violating US sanction rules.

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