HSBC fears U.S. money laundering fines to top $1.5 billion

Mon Nov 5, 2012 7:03am EST
 
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By Steve Slater and Matt Scuffham

LONDON (Reuters) - A U.S. fine for anti-money laundering rule breaches could cost HSBC significantly more than $1.5 billion and is likely to lead to criminal charges, Europe's biggest bank said on Monday.

HSBC said the U.S. investigation had damaged the bank's reputation and forced it to set aside a further $800 million to cover a potential fine for breaches in anti-money laundering controls in Mexico, adding to $700 million put aside in July.

"It could be significantly higher," Chief Executive Stuart Gulliver told reporters on a conference call, saying the latest provision was based on discussions with the various U.S. authorities involved in the probe.

The timing of any settlement is in the hands of regulators and is likely to involve the filing of corporate criminal and civil charges, the bank said.

A U.S. Senate report in July slammed HSBC for letting clients shift potentially illicit funds from countries such as Mexico, Iran, the Cayman Islands, Saudi Arabia and Syria. HSBC had warned earlier in the year it could face criminal or civil charges as part of the investigation.

The London-based bank has said the issue was "shameful and embarrassing" after the report criticized a "pervasively polluted" culture at the bank and said HSBC's Mexican operations had moved $7 billion into its U.S. operations between 2007 and 2008.

"The report undoubtedly caused considerable reputational damage to HSBC. The extent to which that has resulted in loss of business is hard to measure, but it has undoubtedly damaged our brand," Gulliver said.

He said a number of staff had left the firm as a result of the investigation and a number had had pay clawed back.   Continued...

 
A man talking on a mobile phone walks past a HSBC branch office in Mexico City, in this file picture taken July 27, 2012. REUTERS/Edgard Garrido/Files