The
US Senate has released a report which alleges that HSBC Holdings plc (ADR) (NYSE:HBC) “allowed” drug money
from Mexico to pass through it. The bank has also processed some suspicious
transactions from Cayman Islands, Iran, Saudi Arabia and Syria. The report also
claims that US regulators, particularly the Office of the Controller of the
Currency (OCC), have shown negligence in overseeing HSBC, despite multiple warnings.
The
report comes at a time when the British banking sector is already under the
scrutiny of dozens of regulators from around the world. The investigations into
HSBC were carried out by Senate Permanent Subcommittee on Investigations.
A
separate independent investigation by Reuters had earlier revealed that the
bank ‘persistently’ failed to implement its own anti-money laundering
compliance. Senator Carl Levin, the chairman of the committee has blamed the
“polluted” culture of the bank that allowed such things to happen. "The
culture at HSBC was pervasively polluted for a long time," he said.
The
committee also found that OCC allowed the problems to “fester” for several
years until it discovered that two other US government’s agencies were also
investigating into the money laundering scandal.
A
Senate hearing will be conducted on Tuesday in which the bank’s executives will
testify. Thomas Curry, the current controller at OCC will also testify at the
hearing. The report is a result of a yearlong investigation that included a
review of about 1.4 million documents and dozens of interviews of the bank’s
employees and US regulators.
This
however, did not come as a surprise to the bank. Its CEO Stuart Gulliver has
said, "It is right that we will be held accountable and that we take
responsibility for fixing what went wrong ….. As well as answering the
subcommittee's questions, we will explain the significant changes we have
already made to strengthen our compliance and risk management infrastructure
and culture,"
In
another statement, HSBC has said, “"We will apologize, acknowledge these
mistakes, answer for our actions and give our absolute commitment to fixing
what went wrong,"
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Relevant
Links
HSBC
shares fall after money-laundering apology [Bangkok Post]
HSBC
Said to Have Laundered Mexican Drug Cash [Washington Post: video]
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