Huge Fine Levied Against HSBC

Huge Fine Levied Against HSBC

An agreement was made between HSBC and US regulators that will result to no charges filed against the banking giant even as it has to pay a huge financial penalty to settle allegations of money laundering.

The bank will have to pay around $1.92 billion under the settlement that includes deferred prosecution by the Department of Justice. The agreement also calls for the strengthening of some policies of the bank  in terms of compliance. HSBC is confident of reaching a similar agreement with financial authorities in the UK as well.

The bank allegedly failed to prevent Mexican drug cartels from transferring money according to a report from a Senate subcommittee last July. It also failed to prevent similar transfers by banks linked to terrorism financing.

The report indicated that around $7 billion were transferred from the Mexico unit of the bank to its US affiliate. According to authorities, the size of the transfer is possible if it included proceeds from the illegal drug trade.

The bank has reportedly prepared around $1.5 billion in preparation for possible penalties resulting from the money laundering investigation conducted by the authorities in the US. HSBC also revealed that Bob Werner, a former official at the Treasury Department, will head a unit in the bank that will deal with shortfalls in the compliance procedures of the bank as revealed in the recent investigation.

HSBC joins a number of financial institutions that have undergone investigations by US regulators in connection to illicit money transfers.

Posted by James Fried on Tuesday December 11 2012, 4:04 AM EST. Ref: CNN. Link. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0