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Analysis: What a Money-Laundering Settlement Means for HSBC

Monday, December 10, 2012

Federal and New York authorities are expected to announce a record $1.9 billion settlement with HSBC over money-laundering charges on Tuesday, sending a message that banks can't skirt U.S. sanctions law while doing business in the United States.

The settlement stems from accusations that the British banking giant transferred billions of dollars on behalf of sanctioned nations like Iran and enabled Mexican drug cartels to launder money through the American financial system.

Devlin Barrett, reporter with The Wall Street Journal, says the HSBC investigation has been in the works for several years and that the company was setting aside more and more money to deal with the problem.

“There’s also going to be what’s called a deferred prosecution agreement, basically if the company is able to avoid similar problems in the future, they’ll eventually be able to go forward,” Barrett said to WNYC's Amy Eddings.

He says part of the bank's troubles stemmed from acquisitions of Mexican banks and, according to investigators, doing no real checking of their customers.

“In banking, there’s a standard called ‘know your customer’ and it seems that in many instances HSBC did everything they could not to know their customers,” Barrett said.

Federal officials have charged six foreign banks with this type of money laundering transaction since 2009.

Listen above for Amy Edding's full interview with Devlin Barrett.

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Comments [1]

YM from nyc

wow! I'm closing my account with this bank.
Simply appalling.

Dec. 11 2012 12:12 PM

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