HSBC Struggles to Bring Money-Laundering Vigilance Up to Snuff Ese Erheriene and Margot Patrick - The Wall Street Journal
go to original March 30, 2016

The monitor overseeing HSBC’s compliance with a landmark anti-money-laundering settlement has uncovered a range of potential lapses that included the sale of miniskirts to Iran, candy to Syria and the opening of an account by a man in Mexico who had thousands of dollars of cash in a bag, according to a person familiar with the monitor’s findings.

In 2012, HSBC Holdings PLC agreed to pay a then-record $1.9 billion to the U.S. Justice Department to settle allegations it failed to spot the laundered proceeds of drug trafficking in Mexico and failed to flag transactions with countries subject to economic sanctions, such as Iran. The monitor’s findings, which date from 2015, suggest that despite three years of efforts to bring compliance systems up to U.S. standards, HSBC is still struggling to meet the terms of the deal.

According to HSBC’s annual report released in February, the monitor found progress but expressed “significant concerns” about “instances of potential financial crime” and whether HSBC is on track to meet the settlement’s terms. The annual report didn’t include any details of lapses. In a few days, a summary of the monitor’s findings for 2015 will be filed in federal court, which also will likely be stripped of specifics.

HSBC’s 2012 agreement with the government included a five-year deferred-prosecution agreement and a demand that HSBC bring its compliance up to snuff and hire a monitor to check its efforts.

After that point, the Justice Department will decide whether the bank has fulfilled the terms or whether, instead, a prosecution of the bank should proceed. Another path for the DOJ would be to extend the monitoring. Under the most severe scenario, its U.S. banking license could be at risk.

Read the rest at The Wall Street Journal

Related: From Cyber Scammers to Drug Lords, Why China Has Become a Global Money-Laundering Hub (Associated Press)

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