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HSBC fined $1.92 billion by US authorities

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by Jan Harris
HSBC fined $1.92 billion by US authorities

HSBC has received a record $1.9 billion (£1.2 billion) fine from US federal and state authorities after its poor money laundering controls allowed it to be used as a conduit for drug barons and nations on which sanctions had been imposed, including Iran.

Following a multi-agency investigation HSBC was charged with violating sanctions by transferring billions of dollars for sanctioned nations and for enabling Mexican drug cartels to launder money.

It was also charged with working with Saudi Arabian banks linked to terrorist groups.

It has signed a Deferred Prosecution Agreement for breaking the US Bank Secrecy Act, the Trading with the Enemy Act and for money laundering offences.

In a statement, Lanny A Breuer, head of the Justice Department’s criminal division, said:

“HSBC is being held accountable for stunning failures of oversight – and worse – that led the bank to permit narcotics traffickers and others to launder hundreds of millions of dollars through HSBC subsidiaries, and to facilitate hundreds of millions more in transactions with sanctioned countries”.

The bank admitted to having poor money laundering controls and apologised.

It has invested $290 million to upgrade its systems to prevent money laundering and has appointed new senior management.

Meanwhile, in the UK, the Serious Fraud Office has arrested three men in connection with Libor rate rigging.

It is believed that a former trader at Citigroup and UBS is one of the men arrested for allegedly manipulating Libor, which is used in global financial transactions.

In a statement the Serious Fraud Office said: “Three men, aged 33, 41 and 47, have been arrested and taken to a London police station for interview in connection with the investigation into the manipulation of Libor”.

The Serious Fraud Office started its investigation in July after Barclays was fined £290 million over Libor rigging.

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News posted: December 11, 2012

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