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HSBC mega-fine signals beefed up prosecution stance

By Jonathan Ames

11 December 2012 at 14:07 BST

Lawyers are predicting an increasingly robust approach from US financial services prosecutors following record-breaking settlements with two global banks over money laundering and sanctions busting.

He's not the only one the banks have to worry about Clive Chilvers/Shutterstock.com

British-based HSBC is set to take the unenviable position of being hit with the biggest fine to date by US federal authorities as executives braced themselves for a $1.9 billion money laundering penalty.

Sanctions list

The settlement agreed between the bank and Washington’s Justice Department today followed an announcement 24 hours earlier from US prosecutors that they had cut a $327m deal with another British bank – Standard Chartered – for transacting with countries on a federal sanctions list.
Andrei Rado, a partner at New York based law firm Milberg, told the National Law Journal the heavy fines represent a beefed up federal approach to anti-money laundering. ‘The way to get banks to care about anything is to put money on the line,’ he said. ‘To fine a bank $1.9 billion gets their attention. They are giving it to banks where it hurts.’


The newspaper pointed to several other recent cases as forming part of the trend. Last June, Holland’s ING Bank coughed up $619m for dealing in billions of dollars of transactions from embargoed countries such as Iran and Cuba.
And domestic banks have also fallen foul. Two years ago, North Carolina-based Wachovia Bank settled for $160m after federal prosecutors accused it of handling hundreds of millions of dollars in drugs money.
HSBC – Europe’s biggest bank – was accused of ignoring US anti-money laundering rules, and, according to the Reuters news agency, senior officials have admitted to a failure of processes. The agency today quoted the bank’s chief executive, Stuart Gulliver, as saying: ‘We accept responsibility for our past mistakes. We have said we are profoundly sorry for them ... The HSBC of today is a fundamentally different organisation from the one that made those mistakes.’



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