Europe’s largest bank, Hong Kong and Shanghai Banking Corporation (HSBC), is negotiating a settlement with U.S. federal prosecutors for violating anti-money laundering laws, according to Reuters.
HSBC Holdings Plc might pay a fine of $1.8 billion as part of a settlement with US law-enforcement agencies over money-laundering lapses, according to several people familiar with the matter.
The settlement with Europe's biggest bank—which could be announced as soon as next week—will likely involve HSBC entering into a deferred prosecution agreement with federal prosecutors, said the sources, who spoke on condition of anonymity.
President Barack Obama received more than $75,000 from HSBC during the 2008 and 2012 campaigns.
HSBC was hardly blindsided by the probe. The bank set aside $1.5 billion last month in preparation for a similar fine owed to the Mexican government for related violations. The cost for breaching laws in America may be “significantly higher,” according to Chief Executive Stuart Gulliver.
A July Senate Subcommittee report revealed that HSBC “exposed the U.S. financial system to a wide array of money laundering, drug trafficking, and terrorist financing risks due to poor anti-money laundering (AML) controls.” Sen. Carl Levin (D., Mich.) was the subcommittee chairman who oversaw investigations:
HSBC used its U.S. bank as a gateway into the U.S. financial system for some HSBC affiliates around the world to provide U.S. dollar services to clients while playing fast and loose with U.S. banking rules. Due to poor AML controls, HBUS exposed the United States to Mexican drug money, suspicious travelers cheques, bearer share corporations, and rogue jurisdictions. The bank’s federal bank regulator, the OCC, tolerated HSBC’s weak AML system for years. If an international bank won’t police its own affiliates to stop illicit money, the regulatory agencies should consider whether to revoke the charter of the U.S. bank being used to aid and abet that illicit money.