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HSBC to pay $1.9B over money laundering

Dec. 10, 2012 at 9:36 PM   |   Comments

NEW YORK, Dec. 10 (UPI) -- British bank HSBC Holdings PLC is to pay a record $1.9 billion in a settlement with U.S. authorities covering years of alleged money laundering, officials said.

The deal, to be announced Tuesday, stems from accusations the London banking giant transferred billions of dollars on behalf of terrorist financiers in sanctioned nations, including Iran, and let Mexican drug cartels launder money through the U.S. financial system, officials briefed on the matter told The Wall Street Journal, The New York Times and other news organizations.

The commercial and investment banking company, whose motto is "the world's local bank," is expected to forfeit nearly $1.3 billion as part of a deferred-prosecution agreement, the largest-ever U.S. forfeiture for a bank, said the people briefed on the agreement between HSBC and the U.S. Justice Department, Treasury and other federal agencies, as well as the Manhattan district attorney.

It is also to pay a civil fine of more than $650 million, the people said.

Prosecutors may exhibit some of the weapons connected to the HSBC activities in Mexico, a person familiar with the matter told the Financial Times.

As part of the agreement, HSBC will admit to violating the 1970 Bank Secrecy Act, the 1917 Trading With the Enemy Act and other U.S. laws intended to prohibit money laundering, a government official told the Journal.

The Bank Secrecy Act requires financial institutions in the United States to help U.S. government agencies detect and prevent money laundering, tax evasion and other criminal activities. The Trading With the Enemy Act restricts trade with countries hostile to the United States.

"We are cooperating with authorities in ongoing investigations," an HSBC spokesman told the Journal. "The nature of any conversations is confidential."

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