HSBC wins OK of record $1.92 billion money-laundering settlement

Tue Jul 2, 2013 7:16pm EDT
 
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By Jonathan Stempel

(Reuters) - A federal judge has approved HSBC Holdings Plc's (HSBA.L: Quote)HBC.N record $1.92 billion settlement with federal and state investigators of charges that it flouted rules designed to stop money laundering and thwart transactions with countries under U.S. sanctions.

While noting "heavy public criticism" of the settlement, which enabled HSBC to escape criminal prosecution, U.S. District Judge John Gleeson in Brooklyn, New York, called the decision to approve the accord "easy, for it accomplishes a great deal."

Gleeson ruled on Monday after more than six months of review, rejecting arguments by the U.S. government and HSBC that federal judges lacked "inherent authority" over the approval or implementation of so-called "deferred prosecution agreements."

The settlement, announced December 11, 2012, included a $1.256 billion forfeiture and $665 million in civil fines.

It resolved charges accusing HSBC of having degenerated into a "preferred financial institution" for Mexican and Colombian drug cartels, money launderers and other wrongdoers through what the U.S. Department of Justice called "stunning failures of oversight."

HSBC acknowledged compliance lapses, including a failure to maintain an effective anti-money laundering program, and conducting transactions on behalf of customers in Burma, Cuba, Iran, Libya and Sudan, which were all subject to U.S. sanctions.

As part of the settlement, HSBC agreed to tie executive bonuses to meeting compliance standards, improve the internal sharing of information, and retain a compliance monitor.

The latter role is being filled by Michael Cherkasky, a former prosecutor for the Manhattan district attorney and former chairman of the New York State Commission on Public Integrity.   Continued...

 
People sit in an outdoor coffee shop in front of an HSBC bank branch in Valletta May 8, 2013. REUTERS/Darrin Zammit Lupi