HSBC announced this morning that it had reached agreement with U.S. authorities to settle allegations that it had violated anti-money laundering and sanctions laws. It will pay a record $1.9 billion in fines. This comes one day after Standard Chartered agreed to pay $327 million for illegally moving money through the U.S. financial system in violation of international sanctions. The Standard Chartered fine comes on top of $340 million recently paid to New York state authorities for the same allegations.
The allegations against HSBC are fairly broad-based. In fact after one investigation by the U.S. Senate, a report titled “U.S. Vulnerabilities to Money Laundering, Drugs, and Terrorist Financing: HSBC Case History” was produced. (This and other reports can be found here.) The case against Standard Chartered focused more on transactions with entities in sanctioned countries like Iran, hiding the true nature of the transactions from regulators, and obstructing government investigations.
For both banks, these settlements come after years of internal and external investigations, upgrades to systems and procedures, and negotiations with authorities. They will also have to make more improvements in the future.
In HSBC’s statement, Stuart Gulliver, Group Chief Executive, was quoted as saying: “We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again. The HSBC of today is a fundamentally different organisation from the one that made those mistakes. Over the last two years, under new senior leadership, we have been taking concrete steps to put right what went wrong and to participate actively with government authorities in bringing to light and addressing these matters.”
HSBC must also finalize an agreement with the United Kingdom Financial Services Authority, which it expects to do soon.
So these issues seemed to be mostly settled with these banks for now. But the Libor manipulation scandal is being investigated; so these banks, especially HSBC, could be back in the headlines soon.