Hearings | Homeland Security & Governmental Affairs Committee. HSBC Helped Terrorists, Iran, Mexican Drug Cartels Launder Money, Senate Report Says. Senate tells HSBC: Shape up or get out of the United States. July 18th, 2012 Senator Carl Levin has given an ultimatum to HSBC, after a lax approach to money-laundering for drugs cartels and terrorist groups saw the banking giant fail to review thousands of suspicious transactions or properly to vet clients over the past decade. Levin, famous for berating Goldman Sachs’ executives over their “shitty deals“, today told the London-headquartered bank: shape up or get out of the US.
If HSBC fails to root out the problems, Levin implied the bank will have its US operating licence revoked. Levin heads up the Senate investigative panel, whose probe uncovered a litany of distinctly unsavoury practices at the “World’s Local Bank”. HSBC repeatedly apologised and pledged to clean up its act but, for Levin, this doesn’t wash. The Financial Times reported that on July 17, 2007, the bank’s head of compliance for Latin American John Root told his counterpart in Mexico, Ramon Garcia Gibson, that his compliance team “needs some cojones”. Mexico fines HSBC $27.5m for lax money-laundering control. 25 July 2012Last updated at 19:51 ET HSBC Mexico said it recognised it had "failed to strictly comply with banking regulations" Mexican regulators have imposed a fine of $27.5m (£17.7m) on banking giant HSBC for its failure to comply with money-laundering regulations.
The fine comes a week after HSBC's chief compliance officer resigned over allegations that the bank ignored warnings that Mexican drug money was being allowed to pass through the bank. The fine is the highest ever imposed by Mexican regulators. It constitutes 51.5% of the 2011 annual profit of HSBC's Mexican subsidiary. 'Drug kingpins' Mexico's National Banking and Securities Commission (CNBV) said it had imposed the fine against HSBC due to its "non-compliance with anti-money laundering systems and controls". HSBC Mexico issued a statement acknowledging that it failed to report 39 suspicious transactions and had been late in reporting 1,729 others. HSBC's head of compliance, David Bagley, resigned at the Senate committee hearing. HSBC Needs CEO Who Will Clean Up and Break Up the Bank. Bankers have made some dramatic moves in recent years, but even the most cynical observers were stunned last week when David Bagley, HSBC Holdings Plc’s top compliance officer, resigned during a U.S.
Senate hearing. “As I have thought about the structural transformation of the bank’s compliance function,” he told the senators, “I recommended to the group that now is the appropriate time, for me and for the bank, for someone new to serve as the head of group compliance.” Translation: I am taking responsibility for the complete failure of compliance on my watch. The failure is indeed complete. Investigators working for Democratic Senator Carl Levin of Michigan have established a decade-long pattern of behavior in which HSBC, one of the world’s largest banks, provided money-laundering services to drug traffickers in Mexico and criminals around the world.
These were not isolated occurrences. Management Failure Something has gone very wrong on Gulliver’s watch. Highly Compensated.