UK-based banking giant HSBC Holdings Plc has confirmed it will pay more than $1.9 billion to US authorities - the largest fine ever paid by a bank – as settlement in a US criminal probe over money laundering cases and violation of sanction laws.According to a US law enforcement official, HSBC will pay $1.25 billion in forfeiture and pay $655 million in civil penalties.
A US Senate investigation looking into the case found the British Bank – Europe’s largest by market value – playing a conduit for "drug kingpins and rogue nations". The probe centered on HSBC transferring funds through the US financial system from Mexican drug cartels and bypassing restrictions placed on nations like Iran, North Korea and other states subject to international sanctions.
In what is considered as a ‘deferred prosecution agreement,’ the financial institution is being indicted for violating the ‘Bank Secrecy Act’ and the ‘Trading With The Enemy’ Act. Meanwhile, HSBC with its headquarters in London said it was cooperating with investigations. However, it said the discussions on the matter are confidential.
Meanwhile, conceding to having dismal money-laundering controls, the British lender tendered its apology. Stuart Gulliver, group chief executive of HSBC, in a statement opined his bank was a “fundamentally different organization” now. He accepted responsibility for past mistakes and said: “We have said we are profoundly sorry for them, and we do so again.”
The statement further informed HSBC bank had spent $290 million on “remedial measures” to prevent money laundering and taken steps to check its business in “countries that pose a high financial crime risk.” The statement also informed that the bank had “clawed back” some bonuses paid to a number of senior staff in the past.
HSBC even disclosed it was expected to reach an agreement with British monetary watchdog the UK's Financial Services Authority very soon. The statement, that contained a number of steps taken by the bank to address the problems, also said that an independent monitor would assess HSBC’s progress over the five-year term of the agreement with the Justice Department.
In November, the British banking giant had told its investors it had set aside $1.5 billion to cover the costs of any settlement or fines. This was after there were announcements of similar but much smaller settlement with Britain’s Standard Chartered bank, which will shell out $300 million in fines for violating US sanctions.
The record settlement by the British Bank is the latest chapter in an awkward time for the bank. This case is the result of a long investigation launched into Europe's biggest bank by the US law enforcement agencies and the US Senate panel which this July even issued a contemptuous review of HSBC.
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