HSBC to Pay $1.9bn to Settle Money Laundering Probe [VIDEO]
By Jerin Mathew | December 11, 2012 4:59 PM EST
In a deal having a significant "reputational impact", British banking giant HSBC Holdings will reportedly pay a record amount in settlement of a money laundering probe by US authorities.
Europe's biggest bank will pay $1.9bn (£1.2bn, €1.5bn) to settle allegations that it has helped launder money belonging to Mexican drug barons and allowed transferring of billions of dollars on behalf of nations under international sanctions such as Iran. The amount exceeds $1.8bn projected by a Reuters report and $1.5bn set aside by the bank in connection with the probe.
The settlement, in which the US Treasury Department, the Manhattan district attorney's office and the Justice Department will be parties, is expected to occur on 11 December.
The deal will force the bank to forfeit more than $1.3bn as part of a deferred prosecution agreement and to a pay a civil fine of more than $650m, The Wall Street Journal separately reported, citing "people briefed on the agreement between HSBC and multiple US agencies".
The bank will also admit to breaching US laws including the Bank Secrecy Act, the Trading with the Enemy Act and other US laws intended to prohibit money laundering, the WSJ added, citing a government official.
An earlier report by the US senate was critical of HSBC's money laundering controls. The report charged that HSBC accounts in Mexico and the US were helping drug barons to launder money and that the bank circumvented restrictions on dealings with Iran, North Korea, and other states under US sanctions.
The fine would have a significant "reputational impact" and the bank would have to be very careful in future, The Guardian reported, citing Peter Henning, a professor of law at Wayne State University.
In order to be careful going forward, the bank created a new position, the head of financial crime compliance, and appointed Bob Werner, who was previously the head of the US Treasury's Office of Foreign Assets Control, to the post.
The deal comes a day after federal and state authorities announced a $327m settlement with the UK-based Standard Chartered bank. The bank has admitted to accusations including manipulation of transactions for Iranian and Sudanese clients through its American subsidiaries.
Since US law enforcement has made money laundering by banks a priority target, several international banks have been probed, resulting in fines amounting to billions.
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