HSBC accused by US Senate of allowing money laundering
A US Senate investigation report suggests lax controls at HSBC left the bank open to being used for money laundering, including money from countries such as Mexico, Syria and Iran.
The report into Europe’s largest bank, which was released ahead of a Senate hearing taking place later today, says large sums of Mexican drug money almost certainly passed through the bank.
Suspicious funds from Syria, the Cayman Islands, Iran and Saudi Arabia also moved through the institution.
“The culture at HSBC was pervasively polluted for a long time,” said Senator Carl Levin, chairman of the US Senate Permanent Subcommittee on Investigations, a Congressional watchdog panel that issued the report.
The year-long inquiry, which included a review of 1.4 million documents and interviews with 75 HSBC officials and bank regulators, will be the focus of a hearing later today at which HSBC executives are scheduled to testify.
Between 2007 and 2008, HSBC’s Mexican operations moved $7bn into the bank’s US operations. According to the report, both Mexican and US authorities warned HSBC that the amount of money could only have reached such a level if it was tied to illegal narcotics proceeds.
The Senate probe also examined banking HSBC did in Saudi Arabia with Al Rajhi Bank, which the report said has links to financing terrorism. Evidence of those links emerged after the 11 September attacks on the United States, the Senate report said, citing US government reports, criminal and civil legal proceedings and media reports.
In a memo released ahead of the hearing, HSBC chief executive Stuart Gulliver said: “It is right that we will be held accountable and that we take responsibility for fixing what went wrong.
In an emailed statement, HSBC said the Senate report had provided “important lessons for the whole industry in seeking to prevent illicit actors entering the global financial system”.
The bank said it is spending more money on compliance and has become more coordinated in policing high-risk transactions.
This article was first published on Investment Week