UK bank HSBC group has agreed to pay US authorities $1.92bn in relation to investigations regarding inadequate compliance with anti-money laundering (AML) and sanction laws. Standard Chartered has also settled with US authorities for $327m in connection with historical sanctions compliance and U.S. dollar payment practices.
HSBC’s settlements with authorities includes a deferred prosecution agreement (DPA) with the US Department of Justice (DoJ) as well as an agreement to reach resolutions with all other US authorities that have investigated HSBC and its past conducts, in relation to the current issues.
Shadowy fund transfers across the globe
HSBC was accused of money laundering on more than 170 counts, with a report by the US Senate permanent subcommittee published on 17 July revealing that the bank had allowed clients to move suspicious funds from Mexico, Iran, the Cayman Islands, Saudi Arabia, and Syria.
HSBC Mexico was fined $27.5m by the Mexican authorities in July this year, for non-compliance with AML systems and controls in relation to the US Senate investigation.
HSBC Mexico’s affiliates exposed themselves and HSBC US to money laundering by Mexican drug cartels, as a result of multiple AML deficiencies while serving high risk clients, according to a US Senate committee report published in July this year.
HSBC group has also been accused of providing bearer share accounts, US dollar services to banks linked to terrorist financing and bypassing US international sanctions on Cuba and Iran.
The agreement between the Department of Justice and HSBC will last five years and consist of an independent monitor evaluating the bank’s progress in fully implementing remedial measures and producing regular assessments of the effectiveness of the bank’s compliance function.
"We accept responsibility for our past mistakes," HSBC Group CEO Stuart Gulliver said in a statement. "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."
Standard Chartered also settles with US authorities
London-based Standard Chartered Bank has also settled with the US authorities agreeing to pay a total sum of $327m, for charges of illegal transactions with Iran, Sudan, Libya and Burma.
Of the total sum owed, Standard Chartered has agreed to forfeit $227m to the Department of Justice for conspiracy to violate the International Emergency Economic Powers Act (IEEPA). This settlement is part of a DPA with the Department of Justice and the New York County District Attorney’s Office for "violating New York state laws by illegally moving millions of dollars through the U.S. financial system on behalf of sanctioned Iranian, Sudanese, Libyan and Burmese entities", according to a statement by the DoJ.
A Standard Chartered spokesperson confirmed to PBI that the Office of Foreign Assets Control (OFAC) penalty of $132m had been satisfied by the $227 million forfeited to the Justice Department by the bank and that an additional fine of $100m by the Federal Reserve System has also been imposed.
The spokesperson also told PBI, "[Standard Chartered is] pleased to have reached settlement with these agencies regarding our historical sanctions compliance. In agreeing to settle we have acted in the best interests of our shareholders, clients and employees".