The HSBC money laundering scandal which broke out in July has led to the settlement between both the US authorities and HSBC, which will pay $1.9bn (£1.2bn), implying its admission for allegedly helping in providing money for Mexican drug barons, in turn violating US sanctions.
The $1.9bn fine as settlement of money laundering scandal is expected to include around $1.25bn forfeited by HSBC, which is the largest amount ever paid out in such a case. The penalty also includes a $650m civil fine.
In July, HSBC, the British-based bank, was accused of transferring billions of dollars for nations like Iran and enabled Mexican drug cartels to move money illegally through its American subsidiaries.
Today, HSBC is expected to admit to violating US laws meant to prohibit money laundering including the Bank Secrecy Act and the Trading with the Enemy Act.
The US Senate report on HSBC’s money laundering scandal cited examples including the transfer of $7bn between HSBC’s Mexican and US subsidiaries between 2007 and 2008, made despite Mexico’s reputation as a centre of drug smuggling.
The report on HSBC money laundering also stated that HSBC regularly breached restrictions on dealings with Iran, North Korea, and other states under US sanctions. Following the Senate report, HSBC admitted that its compliance systems were not strong enough.
Just ahead of the settlement, HSBC announced the appointment of Bob Werner, a former US official to work as its head of financial crime compliance, a new position created to strengthen its compliance system.
Bob Werner was previously the head of the US Treasury’s Office of Foreign Assets Control (OFAC) – the agency responsible for enforcing the US sanctions on countries including Iran. Bob Werner will take charge of HSBC’s anti money laundering and sanctions compliance systems.