HSBC named in money-laundering scandal

20 July 2012

HSBC has been branded a "financier to drug gangs" by the US Senate for its apparent connection to money-laundering activities.

In a report, the US legislative body said there was a pervasively polluted culture at the world's second-largest bank that meant it routed dodgy cash from the most secretive havens.

Lax money laundering failsafes are nothing new at the bank; the US Office of the Comptroller of the Currency (OCC) took action against HSBC in 2010 for abuses. But Tuesday's report indicates that there were persistent and troubling lapses in the bank's anti-money laundering compliance since 2010.

The bank is expected to face fines of up to $1 billion (£640 million) as a result. 


Carl Levin, chairman of the Senate Permanent Subcommittee on Investigations said the bank's actions had "exposed the United States to Mexican drug money".

He went on to say that HSBC had harmed the US's efforts to combat terrorism by allowing shadowy organisations to use its services.

The bank accepted money from Mexico, Iran, the Cayman Islands, Saudi Arabia and Syria without the proper provisions to ensure the money was clean, and in some cases breaching US sanctions.

In a statement, HSBC said the Senate report had provided "important lessons for the whole industry in seeking to prevent illicit actors entering the global financial system".

This latest development will do little to shore up the reputation of British banks following the Libor fixing scandal at Barclays and the likelihood of it spreading to other banks, which has led to a loss of confidence in the sector.

The report also criticised the regulator, the OCC, for failing to crack down on the bank despite multiple red flags, allowing money-laundering issues "to accumulate into a massive problem".

This was written for our sister website, Interactive Investor


Add new comment