Senator Carl Levin, chairman of watchdog panel the US Senate Permanent Subcommittee on Investigations, said: “The culture at HSBC was pervasively polluted for a long time.”
The report showed up a number of seemingly shady dealings, such as the fact that, between 2007 and 2008, HSBC’s Mexican operations moved US$7bn into the bank’s US operations. The report stated that the bank had been warned by both Mexican and US authorities that such a large amount of cash had to be linked to illegal drugs.
Another instance involved HSBC doing business with Al Rajhi Bank in Saudi Arabia, which allegedly has links to terrorism.
The report also referred to evidence that HSBC’s US operations moved money tied to Iran, violating US prohibitions on transactions linked to the country. HSBC affiliates are said to have used a method called ‘stripping’ to delete references to Iran from records.
Suspicious funds from Syria and the Cayman Islands were also moved through what is Europe’s largest bank, the report said.
The year-long inquiry, which reviewed 1.4m documents and interviewed 75 HSBC officials and bank regulators, also concluded that US bank regulator the Office of the Comptroller of the Currency failed to properly monitor HSBC.
The OCC was accused in the report of allowing issues with money laundering to “accumulate into a massive problem”.
HSBC and OCC officials will testify at a hearing today and are expected to face tough questioning about lapses in the bank’s anti-money laundering compliance.
HSBC said in a statement that the report had highlighted “important lessons for the whole industry in seeking to prevent illicit actors entering the global financial system”.
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