RPT-U.S. senate probe to detail HSBC global transactions
By Carrick Mollenkamp
WASHINGTON, July 13 (Reuters) - A U.S. Senate report will detail HSBC Holdings Plc's dealings in some of the world's riskiest corners, including Mexico, that are considered hotspots for money laundering and other improper financial dealings, said sources familiar with the situation.
The report will be released Tuesday when the Senate Permanent Subcommittee on Investigations, a top congressional financial watchdog, holds a hearing examining the anti-money laundering system of HSBC, Europe's biggest bank.
Several HSBC executives are expected to testify, including the bank's chief legal officer Stuart Levey, who joined the bank in January. He was previously one of the top officials on terrorism and finance at the U.S. Treasury Department.
The U.S. Justice Department has been conducting its own probe examining whether HSBC was vulnerable to illicit funds moving through the bank and a potential settlement could exceed $1 billion, according to people familiar with the situation and an HSBC regulatory filing.
In a regulatory filing earlier this year, HSBC said it expected a formal enforcement action that could be criminal in nature.
Reuters earlier this year reported the Senate probe. A subsequent Reuters story detailed investigations of HSBC's U.S. operations by two U.S. Attorneys' offices.
HSBC is the latest global bank to be caught in U.S. law-enforcement investigations of money laundering. In 2010, Wachovia Corp. agreed to pay $160 million as part of a Justice Department probe that examined Mexican transactions.
Last month, ING Bank NV agreed to pay $619 million to settle U.S. government allegations that it violated U.S. sanctions against Cuba and Iran.
An HSBC spokesman wasn't immediately available for comment. Bloomberg earlier reported a summary of the Senate report.
In a memo this week ahead of the hearing, Chief Executive Stuart Gulliver said: "It is right that we will be held accountable and that we take responsibility for fixing what went wrong. As well as answering the subcommittee's questions, we will explain the significant changes we have already made to strengthen our compliance and risk management infrastructure and culture."
In its regulatory filings, HSBC has said the transactions with Iranian parties are under investigation by the Justice Department, the Federal Reserve and the district attorney in Manhattan. Iran is also expected to be a focus of the Senate investigation.
The Senate probe also is expected to examine HSBC's dealings in Mexico, a country fraught with drug-traffickers who move money through the U.S. banking system. A good portion of that money is transferred through Mexican foreign-exchange houses.
According to documents reviewed by Reuters, U.S. law-enforcement agencies have examined Mexican money that moved from the exchange houses, known as casa de cambio, into the HSBC banking system. The transactions were tied to laundered drug proceeds.
- Tweet this
- Share this
- Digg this