HSBC Money Laundering Huge Penalty
- 12 years ago
HSBC to pay record $1.9 billion to settle money laundering accusations.
The Hong Kong and Shanghai Banking Corporation, commonly known as HSBC, will pay U.S. authorities $1.9 billion in settlement over money laundering, the largest penalty ever paid by a bank.
Money laundering is the process of disguising the proceeds of crime so that the money cannot be linked to the criminal activity.
HSBC admitted to a breakdown of controls and apologized in a statement on Tuesday.
The settlement followed a report published by the U.S. Senate earlier this year, which identified the UK-based bank as a conduit for "drug kingpins and rogue nations".
HSBC was accused of -
- not treating its Mexican affiliate as high risk, despite the country's widespread money laundering and drug trafficking problems
- circumventing U.S. safeguards, including permitting 25,000 transactions without disclosing their links to Iran
- and also providing services to some banks in Saudi Arabia despite their links to terrorist financing.
IG Markets analyst Alastair McCaig says HSBC has already set aside $1.5 billion to cover the fine.
[Alastair McCaig, IG Markets Analyst]:
"Well it's certainly not good news, but having said that, in the second and third quarter HSBC had made provisions of 700 and 800 million, so they had already allocated 1.5 billion towards this and at the beginning of November they had made comments that they felt the fine could ultimately be significantly higher. So they were factoring this in to an extent."
The settlement is the third time in a decade that HSBC has been penalized for lax controls, and ordered by U.S. authorities to better monitor suspicious transactions.
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The Hong Kong and Shanghai Banking Corporation, commonly known as HSBC, will pay U.S. authorities $1.9 billion in settlement over money laundering, the largest penalty ever paid by a bank.
Money laundering is the process of disguising the proceeds of crime so that the money cannot be linked to the criminal activity.
HSBC admitted to a breakdown of controls and apologized in a statement on Tuesday.
The settlement followed a report published by the U.S. Senate earlier this year, which identified the UK-based bank as a conduit for "drug kingpins and rogue nations".
HSBC was accused of -
- not treating its Mexican affiliate as high risk, despite the country's widespread money laundering and drug trafficking problems
- circumventing U.S. safeguards, including permitting 25,000 transactions without disclosing their links to Iran
- and also providing services to some banks in Saudi Arabia despite their links to terrorist financing.
IG Markets analyst Alastair McCaig says HSBC has already set aside $1.5 billion to cover the fine.
[Alastair McCaig, IG Markets Analyst]:
"Well it's certainly not good news, but having said that, in the second and third quarter HSBC had made provisions of 700 and 800 million, so they had already allocated 1.5 billion towards this and at the beginning of November they had made comments that they felt the fine could ultimately be significantly higher. So they were factoring this in to an extent."
The settlement is the third time in a decade that HSBC has been penalized for lax controls, and ordered by U.S. authorities to better monitor suspicious transactions.
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