HSBC News Update: Laundering Settlement Approved

HSBC Banking

This article is sourced from The Guardian: $1.9bn is the largest penalty from the USA to a bank and it certainly hit the London-based bank hard. The money laundering settlement has been approved in court. HSBC News Update: HSBC have agreed to pay a $1.9bn fine to settle a probe by american prosecutors who accused Europe’s biggest bank of money laundering.

HSBC’s record $1.9bn settlement with the US to resolve charges it enabled Latin American drug cartels to launder billions of dollars has been approved in court.

While noting “heavy public criticism” of the settlement, which enabled the London-based bank to escape criminal prosecution, US 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 US government and HSBC that federal judges lacked “inherent authority” over the approval or implementation of so-called “deferred prosecution agreements”.

The settlement, announced on 11 December last year, included a $1.26bn forfeiture and $665m in civil fines. It also 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 US 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 US 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.

HSBC’s $1.92bn payout was the largest US penalty against a bank, topping a $780m penalty imposed in 2009 against Swiss bank UBS AG for aiding tax evasion. A spokesman for HSBC said the bank has since 2011 taken “extensive” steps to help thwart financial crime. “While we are making good progress, there is much more to do,” he said.

A spokeswoman for US Attorney Loretta Lynch in Brooklyn declined to comment.

The deferred prosecution agreement, known as a DPA, lasts for five years, and prosecutors may indict the bank if it violates the terms. Gleeson said “much of what might have been accomplished by a criminal conviction has been agreed to in the DPA,” whose administration he will supervise.

He noted having received requests from the public to reject the agreement because it did not hold HSBC criminally liable. He also read numerous editorials and columns suggesting, as one put it, that HSBC was “too big to indict.”

Gleeson, nonetheless, said “significant deference” was owed to the Obama administration in deciding not to press an indictment. “A pending federal criminal case is not window dressing. Nor is the court, to borrow a famous phrase, a potted plant,” he wrote.

“As long as the government asks the court to keep this criminal case on its docket, the court retains the authority to ensure that the implementation of the DPA remains within the bounds of lawfulness and respects the integrity of this court.”

Although HSBC has been making good progress towards stopping financial crime after it was cleared of criminal prosecution due to heavy public criticism of the settlement, there is still “much more to do” says a HSBC spokesman. If you want to speak to a HSBC representative please call our HSBC telephone number.

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