U.S. probing HSBC on cartel money

July 16, 2012 at 9:48 PM
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NEW YORK, July 16 (UPI) -- A U.S. Senate committee report found international banking giant HSBC allowed transfers of billions of dollars connected to terrorist groups and drug cartels.

The Permanent Subcommittee on Investigations report, released Monday, said HSBC, based in London, failed to scrutinize thousands of questionable transactions and allowed clients to go without proper vetting during the past decade, CNN reported.

The report found the bank's Mexican unit transferred $7 billion to its U.S. affiliate in 2007 and 2008, an amount law enforcement officials said could only have "included illegal drug proceeds." It found HSBC Mexico's clientele included several clients with drug trafficking connections and the bank had "a huge backlog of accounts marked for closure due to suspicious activity, but whose closures were delayed."

HSBC had extensive dealings with Al Rajhi Bank, a Saudi Arabian bank the report said was founded in part by "an early financial benefactor of al-Qaida," the report says.

Subcommittee Chairman Sen. Carl Levin, D-Mich., said the report showed that "the failure of accountability here is dramatic."

In a statement, HSBC acknowledged it has "in the past ... sometimes failed to meet the standards that regulators and customers expect" but said it has improved its compliance efforts.

"We believe that this case history will provide important lessons for the whole industry in seeking to prevent illicit actors entering the global financial system," the statement said.

A Department of Justice spokeswoman declined to comment on a report that the department is investigating HSBC on the matter, CNN said.

The subcommittee is scheduled to take testimony Tuesday from HSBC executives, as well as officials from the Treasury Department, the Department of Homeland Security and the Office of the Comptroller of the Currency.

Topics: Carl Levin
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