" ... In July, bank officials apologized to the U.S. Senate for their lax money-laundering controls, which allowed Mexican drug cartels to launder billions of dollars over a period of seven years, according to a Senate subcommittee report. The bank may also have been used to send money to Iran and to terrorist groups. ... "
HSBC To Pay $1.9 Billion To Resolve Allegations The Bank Ignored Possible Money Laundering: Report
By Mark Gongloff
Huffington Post (excerpts), Deccember 10, 2012
British banking giant HSBC, Europe's biggest bank, is set to pay $1.9 billion to settle accusations that it didn't do enough to stop money laundering in its branches ...
HSBC's fine would shatter records for criminal and civil penalties paid by a bank, according to the WSJ. But it would not be more than investors had already expected. The bank on November 5 said it was setting aside $1.5 billion to cover potential penalties and warned it might have to pay a "significantly higher" amount. Reuters reported last week that the bank would likely soon settle for $1.8 billion.
What's more, HSBC will enter a deferred-prosecution agreement, the WSJ reports, which is essentially probation: The company will admit to violating the Bank Secrecy Act and the Trading with the Enemy Act. It will get a stern warning and promise to clean up its act.
Such a deal would make a "mockery of the criminal justice system," former Treasury Department official Jimmy Gurule, now a University of Notre Dame law-school professor, told Reuters last week.
As for the penalty, it will amount to a little more than half of the $3.5 billion in pre-tax profits the bank earned in the third quarter of 2012. The bank earned $16.8 billion in net income in 2011.
In July, bank officials apologized to the U.S. Senate for their lax money-laundering controls, which allowed Mexican drug cartels to launder billions of dollars over a period of seven years, according to a Senate subcommittee report. The bank may also have been used to send money to Iran and to terrorist groups, according to the report.
A top U.S. regulator, the Office of the Comptroller of the Currency, also did little to push HSBC to fix money-laundering issues that had been a concern for many years, according to the Senate report.
And HSBC is not alone: British bank Standard Chartered on Monday was slapped with a $327 million fine in its own deferred-prosecution deal over its laundering practices. And U.S. banks such as JPMorgan Chase and Bank of America are also under scrutiny for their laundering-prevention practices. ...