HSBC to pay $1.92 bn to settle US laundering probe

HSBC to pay $1.92 bn to settle US laundering probe

HONG KONG - Agence France-Presse
HSBC to pay $1.92 bn to settle US laundering probe

REUTERS/Stefan Wermuth

Banking giant HSBC said Tuesday it would pay US authorities a record $1.92 billion to settle allegations of money laundering that were said to have helped Mexican drug cartels, "terrorists" and Iran.

"HSBC has reached agreement with United States authorities in relation to investigations regarding inadequate compliance with anti-money laundering and sanctions laws," the Hong Kong-listed lender said in a statement.

The London-based but Asia-focused bank also vowed to continue to cooperate fully with authorities to strengthen its compliance policies after the "deferred prosecution agreement" with the US Department of Justice.

"We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again," group chief executive Stuart Gulliver said in the statement.

"The HSBC of today is a fundamentally different organisation from the one that made those mistakes.

"We are committed to protecting the integrity of the global financial system. To this end we will continue to work closely with governments and regulators around the world," Gulliver added.

A money-laundering indictment, or a guilty plea, would have essentially spelt the end for the lender as it could have cut it off from certain investors such as pension funds and cost it its charter to operate in the United States.

Castor Pang, head of research at investment bank Core Pacific-Yamaichi, told AFP the news was good for investors as it "helps ease the uncertainties".

He added that the lender would have been "damaged severely" and financially if the probe had gone ahead.

The Hong Kong-listed shares of HSBC rose 0.31 percent to end at HK$79.70.

In a report in July, a Senate committee said the lender allowed affiliates in countries such as Mexico, Saudi Arabia and Bangladesh to move billions of dollars in suspect funds into the United States without adequate controls.

Lawmakers said money laundered through HSBC-linked accounts benefited Mexican drug lords and terrorist networks.

Among the findings was the revelation that HSBC and its US affiliate concealed more than $16 billion in sensitive transactions to Iran, skirting US sanctions on the country for a six-year period.

The firm soon afterwards apologised for failing to apply anti-laundering rules and David Bagley, head of group compliance, was forced to step down from his post.

HSBC said it has conducted extensive internal investigations since the revelations and vowed to put in place "robust standards that will help promote the integrity" of the global financial system.

Prior to the settlement, HSBC has said in November that it had set aside $1.5 billion for fines linked to money-laundering in the United States.

In a separate deal, the US Treasury said Monday that Standard Chartered will pay $327 million to settle charges it violated US sanctions on Iran and Myanmar.