HSBC to face US lawmakers over money laundering charges

HSBC is the latest bank to admit to fraud and face a major penalty, after an internal memo revealed that the bank would "acknowledge and apologise" to a US Senate hearing for failing to spot money laundering within the bank.

In a memo seen by all global major outlets, the bank will say that it failed to have the appropriate systems and controls in place to mitigate the risk of financing terrorism and other criminal activities through money laundering over the period from 2004-10.

"We failed to spot and deal with unacceptable behaviour. It is right that we are held accountable and that we take responsibility for fixing what went wrong," said Stuart Gulliver CEO at HSBC.

"Between 2004 and 2010, our anti-money laundering controls should have been stronger and more effective."

The hearing will open on 17 July under the label, Vulnerabilities to Money Laundering, Drugs, and Terrorist Financing: HSBC Case History. It is likely to be attended by Irene Dorner, chief executive of HSBC's North American business, and at least one other senior executive.

HSBC has been under investigation by the US Senate permanent sub-committee on investigations for months as part of an effort by Congress to probe legally questionable money flows.

In 2010 the Federal Reserve and the Office of the Comptroller of the Currency (OCC) launched a probe after regulators found there was "a significant potential for unreported money laundering or terrorist financing".

The size of a fine could be in the billions of dollars as analysts have predicted that the bank could be hit with a higher charge than other banks found guilty of money laundering.

Fully cooperating with PSI

HSBC said in its 2011 annual report that fines relating to money laundering issues could be "significant".

An HSBC spokesperson told IBTimes UK: "HSBC confirms that it will testify before the Senate permanent sub-committee on investigations. As disclosed in regulatory filings, HSBC has been fully cooperating with the PSI and regulatory authorities in the United States in relation to these issues.

"We will be discussing a number of compliance issues with members of the sub-committee, including past AML practices and in particular HSBC's remediation and resolution of compliance matters.

"The board and leadership of HSBC are fully committed to implementing the highest standards and have already made significant changes to our organisation's structure to bring this about."

In June, Dutch group ING Bank settled with US lawmakers and paid a $619m penalty for violating US sanctions.

ING admitted to falsifying the records of New York financial institutions after it shifted billions of dollars through the US financial system for Iranian and Cuban companies.

In recent years, a number of other banks, including Credit Suisse, Lloyds and Barclays have also been fined over failures relating to US money laundering or sanctions breaches.

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