United States Fed Ends Enforcement Actions Against HSBC, 10 Years after $1.92 Billion in Fine for Money Laundering for Mexican & Colombian Drug Cartels
2nd September 2022 | Hong Kong
The United States Federal Reserves (Fed) has ended enforcement actions against HSBC, 10 years after the banking giant was fined $1.92 billion for money-laundering offence including money-laundering for Mexican & Colombian drug cartels. On 1st September, the Federal Reserve Board officially announced the termination of the enforcement action listed to HSBC Holdings plc, London, United Kingdom. In 2012, HSBC entered into a 5 year deal to strengthen anti-money laundering controls. See below for HSBC Money Laundering Between 2001 to 2010.
“ United States Fed Ends Enforcement Actions Against HSBC, 10 Years after $1.92 Billion in Fine for Money Laundering for Mexican & Colombian Drug Cartels “
HSBC Money Laundering Between 2001 to 2010
Cease & Desist Order on 11th December 2012:
HSBC had admits that it violated the BSA by willfully failing to establish and maintain an effective AML program and willfully failing to establish due diligence for foreign correspondent accounts
HSBC admits that it violated TWEA by willfully violating or attempting to violate any regulation issued under TWEA, including regulations restricting transactions with Cuba. Holdings further admits that it violated IEEPA by willfully violating or attempting to violate any regulation issued under IEEPA, including regulations restricting transaction with Iran, Libya, Sudan, and Burma.
Between 2006 and 2009, Holdings’s banking subsidiary in Mexico, HSBC Mexico (“HBMX”), was able to engage in a substantial number of high-risk transactions with HBUS while maintaining an inadequate system of internal controls to manage the risk of money laundering. Holdings officials failed to communicate certain negative findings in internal audits of HBMX and concerns raised by foreign governing bodies regarding the AML practices of HBMX to HNAH and HBUS appropriate legal and compliance staff in the United States, while simultaneously maintaining firm-wide standards and policies that discouraged HBUS from conducting appropriate levels of due diligence and monitoring of the bank’s foreign correspondent accounts; and
From at least 2001 to 2007, Holdings’s banking subsidiaries in Europe, HSBC Bank plc (“HBEU”), and the Middle East, HSBC Bank Middle East (“HBME”), moved, or permitted to be moved, illegally several hundred million dollars through the U.S. financial system on behalf of banks located in Cuba, Iran, Libya, Sudan, and Burma, and persons listed as parties or jurisdictions sanctioned by OFAC in violation of U.S. economic sanctions in a manner that circumvented the system established by HBUS for ensuring compliance with the laws of the United States, including the regulations issued by OFAC (31 C.F.R. Chapter V) (the “OFAC Regulations”). Holdings failed to adequately review the procedures used by HBEU and HBME to determine whether these transactions were carried out in a manner consistent with U.S. law.
Between 2006 and 2010, HBUS failed to maintain internal controls, staffing and resources sufficient to adequately identify and mitigate the risks associated with high risk transactions conducted through the bank’s foreign correspondent accounts, especially those relating to the bank’s Mexican affiliate. In this regard, HNAH failed to ensure that HBUS had an adequate process to identify high risk customers and countries that may be potentially associated with money-laundering or terrorist financing.
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