Belfast Telegraph

Thursday 18 December 2014

Bonuses curbed at 'blatant' HSBC

HSBC will pay more than one billion US dollars in forfeiture to settle a money-laundering inquiry in the US
HSBC will pay more than one billion US dollars in forfeiture to settle a money-laundering inquiry in the US

US prosecutors said HSBC had shown a "blatant" failure to implement proper anti-money laundering controls as it announced restrictions to bank boss bonuses under the terms of a record 1.9 billion US dollar (£1.2 billion) settlement.

The Department of Justice (DoJ) said the bank's most senior officials must defer some of their bonuses for five years after HSBC allowed rogue states and drug cartels to launder billions of pounds through its US arm.

At a press conference in New York, DoJ assistant attorney general Lanny Breuer said the "record of dysfunction that prevailed at HSBC for many years was astonishing".

The DoJ said in total HSBC's US arm had failed to monitor 670 billion US dollars (£415 billion) in wire transfers and 9.4 billion US dollars (£5.8 billion) in purchases of physical US dollars from HSBC Mexico between 2006 and 2009.

It also said HSBC had "knowingly" allowed hundreds of millions of dollars to move through the US financial system on behalf of banks in sanctioned countries including Cuba, Iran and Sudan.

UK financial regulator the Financial Services Authority (FSA) said it had ordered the bank to establish a committee and independent monitor to oversee anti-money laundering activities.

The bonus deferrals, under the terms of the DoJ's Deferred Prosecution Agreement, are expected to hit dozens of managers including chief executive Stuart Gulliver.

Mr Gulliver, who took charge of HSBC at the beginning of last year after the breaches occurred, said: "We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again."

Earlier this year, a US Senate sub-committee found that the US arm of HSBC treated HSBC Bank Mexico, which transported seven billion US dollars (£4.5 billion) in cash in armoured vehicles to the bank in 2007 to 2008, as a "low-risk" client.

It offered banking services to HSBC Bank Mexico despite the country's troubles with money laundering, drug trafficking and weak controls. Other foreign HSBC banks avoided safeguards designed to block transactions involving terrorists, drug lords and rogue regimes.

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