HSBC comes up short in money laundering vigilance, U.S. says

Fri Apr 1, 2016 3:17pm EDT
 
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By Jonathan Stempel

NEW YORK (Reuters) - HSBC Holdings Plc has not done enough to thwart money laundering, despite making significant progress since reaching a landmark 2012 anti-money-laundering settlement with U.S. prosecutors, a federal monitor has found.

The monitor "remains unable to certify that the bank's compliance program is reasonably designed and implemented to detect and prevent violations of AML and sanctions laws," U.S. Attorney Robert Capers in Brooklyn, New York said in a letter filed on Friday with the federal court there.

"Although HSBC made significant progress last year, the monitor believes that the bank continues to face significant challenges," Capers added.

The London-based bank has spent three years upgrading its oversight of customer transactions, after reaching a $1.92 billion settlement of U.S. Department of Justice charges tied to money laundering.

Prosecutors said HSBC failed to spot suspicious activity related to Mexican and Colombian drug cartels, and handled transactions for customers in countries subject to U.S. sanctions, such as Myanmar, Cuba and Iran.

As part of the settlement, HSBC entered a five-year deferred prosecution agreement and agreed to monitoring by Michael Cherkasky, the executive chairman of compliance firm Exiger and a former prosecutor.

The Justice Department could prosecute HSBC or extend the monitoring if the bank fails to live up to its commitments.

"HSBC remains focused on fulfilling its obligations under the DPA and implementing the most effective standards globally to combat financial crime," bank spokesman Rob Sherman said.   Continued...

 
The HSBC headquarters is seen in the Canary Wharf financial district in east London, Britain February 15, 2016.   REUTERS/Hannah McKay