HSBC To Pay £1.2bn In Money Laundering Case
HSBC has confirmed it will pay $1.92bn (£1.2bn) to settle a money-laundering probe by US authorities - the largest penalty of its kind ever paid by a bank.
The investigation of Europe's largest bank has focused on the transfer of billions of dollars on behalf of nations such as Iran and the movement of money through the US financial system from Mexican drug cartels.
The bank is expected to pay $1.25bn (£778m) in forfeiture - the biggest such amount in any case involving a bank - on top of $655m (£408m) in civil penalties.
Under what is known as a deferred prosecution agreement, the bank will be accused of violating the Bank Secrecy Act and the Trading With The Enemy Act.
Following the announcement, Sky's City Editor Mark Kleinman learned that the financial penalty will result in lower bonus payments among top executives.
The bank's chief executive, Stuart Gulliver, said it accepted responsibility for its past mistakes.
"We have said we are profoundly sorry for them, and we do so again," he said in a statement.
"The HSBC of today is a fundamentally different organisation from the one that made those mistakes.
"Over the last two years, under new senior leadership, we have been taking concrete steps to put right what went wrong and to participate actively with government authorities in bringing to light and addressing these matters."
The bank added that it also expected to reach a settlement with the Financial Services Authority in the UK.
A US Senate investigative committee reported earlier this year that in 2007 and 2008, HSBC Mexico sent about $7bn (£4.35bn) in cash to the US. The committee said such an amount of cash pointed to illegal drug proceeds.
The current trade minister, Lord Green, was HSBC's chairman from 2006 to 2010, after serving as its chief executive between 2003 and 2006.
Last month it emerged HSBC had set aside as much as $1.5bn (£935m) to cover the bill from US authorities.
The HSBC agreement comes after another London-based bank, Standard Chartered, agreed to pay $340m (£203m) to settle federal charges that it laundered money on behalf of four countries, including Iran, that were subject to US economic sanctions.
That deal covered currency transactions made at the bank's New York branch for Iranian, Sudanese, Libyan and Burmese entities from 2001 to 2007.
With US officials increasingly cracking down on money laundering by banks, Credit Suisse, Barclays and Lloyds have all paid settlements since 2009 related to allegations that they moved money for people or companies that were on the US sanctions list.
Before HSBC's fine, the largest amount paid out was by ING Bank NV in June, which agreed to pay $619m (£384.8m) to settle allegations that it violated sanctions against countries including Cuba and Iran.
what do you think?
The Americans will do anything to make money from us yet their businesses fiddle their taxes erc. How can the bosses of a bank in this country know what they're doing in America and Mexico on computer it may all look legitimate they should be dining people their as well as here
Shirley this is do as we say not as we do. The fact the bank deal in US$ gives the US jurisdiction so the bank is not free to deal with anyone the US deem an enemy of their state. About time we hit a few of their institutions domicile in this country.
What i find staggering is that HSBC has a spare £1 BILLION lying around to set aside. It's a mind-boggling sum of cash considering that they aren't supposed to have any. I make no pretensions of understanding banking but i watch films and read books it seems to share many characteristics with the high-end gangster world to me. I do wonder though if a US bank would receive such a large fine...
I think Lorgar you will find HSBC had no problem and were not part of any bail out. As a major international trading bank they deal daily with far more than $1B.
i would think that HSBC's expenses on a daily basis must be close to £1 biilion
The big banks all turn a blind eye to profits of crime, money laundering and have done for years. It is a lucrative business for them and time it was stopped! You would be surprised to know how many houses are bought with laundered cash in London and up and down the country. Unfortunately Britain is seen as a soft touch by criminal gangs, with our ask no questions approach.
Please Sunny get your facts correct as far as the US are concerned they can impose these sanctions on any bank operating in any jurisdiction under extraterritorial jurisdiction provisions because they are dealing in US$
The Hongkong and Shanghai Banking Corporation, this bank is loaded, 1 billion is nothing to them. This banks roots dates back to the colonial days of British Hong Kong
ali tell me why you got a thumbs down for a factual statement?
probs my ex wife shirley :)
mmmm explains all ;-)
And dont forget ali, Hsbc made their initial profits by forcing the Chinese to produce heroin for the British Empire during The Opium Wars
HSBC goes on the defensive under pressure from the US - if I or you did what the US are doing we would be arrested for robbery. The US conveniently ignore the black operations they have run (and probably still run) through London and Europe !!
Reduced bonuses? Wow! That must be worse than going to jail.
HSBC will pay the fine out of the virtual money markets the big bubble bond fraud and we the customers pick up the bill i.e. lower savings/ pensions pots . Another big bang after the new year no not the Earth our world .