HSBC to change way it polices illicit funds amid laundering revelations
A US Senate panel heard the bank is to shut down some offshore business and change the way it regulates illicit funds
By CFOWorld staff | CFO UK | Published 16:37, 18 July 12
HSBC Holdings is to change the way it regulates illicit funds and close some offshore businesses but US senators were not appeased after the revelations of money laundering problems at the British bank.
A US Senate hearing by comes just a few days after an investigations committee released a 400-plus-page report detailing how the bank acted as a financier to clients channelling funds from the world's most dangerous corners, including Mexico, Iran and Syria.
While money laundering problems at HSBC have been flagged by regulators for nearly a decade, the criticism comes at a sensitive time for the banking industry.
HSBC's top compliance officer announced he was stepping down and that the bank will shut down businesses in secret havens such as the Cayman Islands, but those offers did not blunt the senators' allegations that the bank sacrificed propriety for profits.
Banks are facing accusations of greed tied to allegations that international banks for years tried to rig the global lending benchmark rate Libor and other scandals, including a trading bet gone awry at JPMorgan Chase & Co.
The hearing brought HSBC's own scandal squarely into the political spotlight.
US senator Carl Levin, who chairs the panel, read what he said was a 1993 statement from HSBC that asked its group members to comply with the letter and spirit of laws, and said it sounded similar to the commitments offered by HSBC on Tuesday.
"Do you agree, given past commitments have not been kept, that the bank has a heavy burden of proof that they mean what they say?" Levin asked one panel of witnesses consisting of HSBC's top legal officer and the head of HSBC's US operations.
Levin later added that others would judge HSBC's accountability. "We are not in the prosecution business here, we are in the oversight business."
The bank is still facing a Justice Department investigation, with a potential fine that dwarfs the record $619 million that ING agreed in June to pay to settle similar claims.
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