Tags: money | laundering | HSBC | drug

HSBC Has 'Much Work' to Do in Money Laudering Pact, Monitor Says

Tuesday, 01 April 2014 02:25 PM

HSBC has made some progress in improving its anti-money laundering program as required by a 2012 deferred prosecution agreement with the U.S. Justice Department, but there remains "much work to be done," federal prosecutors said in a Tuesday court filing.

The British bank paid nearly $2 billion in penalties in December 2012 to resolve charges that it failed to stop hundreds of millions of dollars in drug money from flowing through the bank from Mexico, and it promised to fix the problems.

The government had selected independent monitor and former New York prosecutor Michael Cherkasky to monitor HSBC's compliance with the agreement. The Tuesday report describes Cherkasky's conclusions to date.

"Based on his Initial Review and subsequent conversations with the Bank, the Monitor believes that the leadership of HSBC Group is appropriately committed to addressing the Bank's longstanding compliance deficiencies," the Justice Department said in the filing.

It added that Cherkasky, who hired dozens of experts to help him, found that many of the bank's actions to correct anti-money laundering deficiencies "did not begin in earnest until early 2013," after it entered into the agreement.

HSBC reportedly disputed that finding and "maintains it did act promptly to begin remediation efforts prior to 2013," the court document states.

More than two years prior to the agreement, an order by HSBC's regulator, the Office of the Comptroller of the Currency, cited failures to properly police high-risk cash transactions and ordered anti-money laundering improvements.

HSBC spokesman Rob Sherman declined to comment.

Cherkasky's findings, which the filing said were made based on unverified information provided by HSBC, suggested the bank must improve the reliability of the data it gathers on its customers and the manner in which that information is shared among affiliates.

Cherkasky also found that HSBC must better integrate its various IT and transaction monitoring systems, the filing said.

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HSBC Holdings Plc has "much work" to do as part of a $1.9 billion deferred prosecution pact with the Justice Department, a monitor said today in a report on the U.K.-based bank's performance under the terms of the agreement.
Tuesday, 01 April 2014 02:25 PM
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