Argentina questions HSBC’s anti-money laundering controls

HSBC is again plagued by fresh money laundering claims by Argentina government which alleged that the bank facilitated tax evasion through the creation of an illegal scheme that enabled clients to hide more than £50m. Argentina’s tax chief Ricardo Echegaray claimed that the scheme, which was set up by HSBC’s Argentina subsidiary, was approached by a criminal organisation and fake receipts were used to launder money for various companies. Last year, HSBC had shelled out the largest fine in the history of such a case to the US authorities worth $1.9bn (£1.2bn) in a settlement over money laundering. If convicted for helping tax evasion, HSBC is likely to get fines ranging from three to 10 times the amount.

Ricardo Echegaray claimed that HSBC never informed the tax authorities about the alleged scheme and he named three companies which he said had created “phantom operations” to launder cheques and evade tax through it. Since February, the bank “had been rolling out a fraud-enabling platform” that Ricardo Echegaray called “a manoeuvre to hide bank account information from tax collectors”.

The country’s tax authority said it had filed criminal charges against HSBC. Britain’s second largest bank said that it would cooperate with the investigation, adding that the allegations were “of great concern”. The bank’s Latin America spokeswoman, Lyssette Bravo, issued a statement that did not deny the accusations and promised to co-operate. She said, “HSBC takes compliance with the law, wherever it operates, very seriously and strongly supports the efforts of governments and regulators to detect unlawful activity and take appropriate action.”

During its earlier money laundering scandal, HSBC’s head of compliance resigned from his position and apologised to Senate investigators after it was found HSBC had lax controls that exposed it to money laundering and potential terrorist financing. It may also be noted that HSBC also appointed former head of US Treasury’s Office of Foreign Assets Control, Bob Werner, to work as its head of financial crime compliance, a new position the bank had created to improve its compliance standards.