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Wednesday
Mar132013

Will Judge Go Rogue, Reject DOJ Settlement with HSBC?

Simon Dawson/Bloomberg via Getty Images(NEW YORK) -- There could be a hitch in the Justice Department's controversial decision not to prosecute Europe's largest bank over allegations it laundered money for Mexican drug gangs, rogue states and terrorist money men.

To the surprise of some experts, a federal judge has so far refused to sign off on an agreement reached three months ago between federal prosecutors and the Britain-based bank HSBC.  Despite what prosecutors said was a mountain of evidence of illicit money transfers, the deal enabled HSBC to avoid a potentially crippling criminal prosecution.  Instead, HSBC agreed to pay an unprecedented $1.92 billion in fines.

While the Justice Department brokered the deal, it can't go through without the approval of U.S. District Court Judge John Gleeson.

"It does not seem likely that the judge would have taken this much time if he was not at least thinking hard about whether to accept the agreement," said Duke University Law Prof. Sam Buell, a former federal prosecutor.

The Justice Department decision to allow the bank to avoid criminal sanctions has been pilloried by lawmakers.  Sen. Jeff Merkley, an Oregon Democrat, accused the Justice Department of creating a "prosecution free zone" for big banks.

Lawmakers said they were particularly irritated by suggestions from Attorney General Eric Holder and other senior Justice officials that the government avoided prosecuting the bank because doing so had the potential to destabilize the economy.  That assertion led lawmakers to question whether banks as large as HSBC are "too big to prosecute."

"If you're caught with an ounce of cocaine, the chances are good you're going to jail," said Sen. Elizabeth Warren (D-Mass.).  "Evidently, if you launder nearly $1 billion for drug cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your own bed at night."

In a December court hearing in New York, Gleeson asked lawyers for the Justice Department and HSBC to provide him their arguments for him to approve the deal.

"My suggestion is you present to the court a document that demonstrates why I should accept the agreement," Gleeson said, according to published reports. "There's been some publicized criticism of this.  I think you should feel free to address it."

In January, each side presented the judge with written arguments defending the deal, known as a deferred prosecution agreement.  In the government's 20-page filing, federal prosecutors argued that the deal "was carefully tailored to punish the defendants and deter future misconduct of others."  It also repeated the assertion that a criminal prosecution could result in "collateral consequences, including … disproportionate harm to shareholders, pension holders, employees, and others not proven personally culpable."

The bank, in turn, argued that a deal is a deal.  HSBC lawyers wrote that the bank has already paid a steep price -- publicly admitting to wrongdoing and suffering "unusual reputational harm" as a result.

"The government must be held to its obligations," the filing says.

ABC News left messages for HSBC lawyers and the Justice Department seeking comment but did not receive a response.

Buell said both sides make legitimate points, and added that the Justice Department would be placed in a tough spot if the judge rejects the agreement.  But because criminal charges are still pending against HSBC, Buell said, the judge still has the power to reject the deal and force the government to move ahead with a prosecution or propose a different deal.

Gleeson has not signaled which way he will rule.  He issued an order in mid-February stating only that "the Court has not yet approved or disapproved the proposed agreement disposing of the case.  The application for approval of that agreement has been taken under advisement."

Copyright 2013 ABC News Radio

Thursday
Mar072013

Senators: 'Prosecution-Free Zone' for Big Banks?

Sion Touhig/Getty Images(WASHINGTON) -- Members of a U.S. Senate banking committee blasted federal regulators Thursday for allowing Europe's largest bank to dodge a potentially crippling criminal prosecution after it had allegedly laundered millions of dollars for terrorist financiers, rogue states, and Mexican drug cartels.

The U.S. Department of Justice's recent decision not to prosecute London-based HSBC, despite what officials said was a mountain of evidence against the bank, signaled that there is, "a prosecution-free zone for large banks in America," said Sen. Jeff Merkley, an Oregon Democrat.

"If you're caught with an ounce of cocaine, the chances are good you're going to jail," said Sen. Elizabeth Warren, D-Mass. "Evidently, if you launder nearly $1 billion for drug cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your own bed at night."

What appeared to distress the senators the most were statements from the Justice Department indicating that the decision not to prosecute HSBC was made in part out of fears that a prosecution could destabilize the world economy.

Attorney General Eric Holder confirmed that reasoning in comments before a different Senate panel Wednesday when he said, "It does become difficult for us to prosecute when we are hit with indications that if we do... it will have a negative impact on the national economy, perhaps even the world economy."

On the receiving end of Thursday's tongue lashing from senators at the Banking, Housing and Urban Affairs Committee hearing were officials from the U.S. Treasury Department, the Federal Reserve and the Comptroller of the Currency -- three of the nation's most powerful financial regulators -- but no representatives from the Justice Department.

All three of the regulators said the decision forgo a prosecution of HSBC in favor of a record $1.92 billion settlement was reached with minimal input from them -- and instead was the domain of Justice Department lawyers. Sen. Mark Warner, D-Va., accused the men of playing "pass the potato."

Warner said the regulators had plenty of tools in their arsenal to go after HSBC, but failed to use them.

There was little question that a criminal prosecution was the most aggressive approach the government could have taken in response to HSBC's actions. A conviction would have automatically launched a process that could have led to the government revoking the bank's license to do business in the United States, which in turn could have put HSBC out of business.

But the senators were incredulous that a bank of HSBC's size and reach around the globe could avoid prosecution for that reason – that they were, in Merkley's words, "too big to prosecute."

Warren grilled the regulators on this point, asking if they could identify a case of money laundering egregious enough to trigger a prosecution.

"What I'd like is your opinion," she pressed. "How many billions of dollars of drug money do you have to launder before someone will consider shutting down a bank?"

David Cohen, the Treasury's under secretary for terrorism and financial intelligence, seemed to equivocate in his first attempt at a reply. Warren came right back at him.

"I'm not hearing your opinion on this," she said. "What I'm asking is, what does it take even to say: 'Here is where the line is and if you cross that line you're at risk of having your bank shut down?'"

Cohen did not provide an answer. He said only that Justice officials sought guidance from the Treasury Department about the broader economic impact a prosecution of HSBC could have, but that his office declined to provide an answer.

"We informed the Justice Department that...we were not in a position to offer any meaningful guidance to department in that matter," he said.

The response seemed only to further perturb Warren, who was elected to the Senate last fall on a promise to crack down on Wall Street, and who found in Thursday's hearing an opportunity to show she is pursuing that mandate.

"So you just said to the Justice Department, 'You're on your own in figuring this out,'" she said, not waiting for a reply.

Sen. Heidi Heidkamp, a North Dakota Democrat, asked the three witnesses to give the Senate their word that they would to push harder for a prosecution in the future.

"If we leave here without a commitment from all of you that you will vigorously encourage, and suggest, and recommend, that the Justice Department prosecute cases that must be prosecuted in order to insure equal justice under the law in this country, then we failed," she said.

None of the men offered that pledge.

As the dressing down continued, members of the committee said they wanted to see Justice Department officials brought before them to offer their explanation for why the HSBC case ended with a settlement. Whether that will occur remains to be seen. Advocates who have pushed for the U.S. to take a tougher posture against banks that launder money said they hope the committee continues to push.

"What is clear is that the system isn't working," said Stefanie Ostfeld, a policy advisor with Global Witness, an international advocacy organization that works to root out financial crimes and corruption. "There is no incentive for bankers to comply with the law when there are no personal consequences for getting it wrong. Until senior bankers are held legally responsible for the bank's compliance, the U.S. financial system will remain vulnerable to terrorist finance and the proceeds of corruption and drug trafficking."

Only one Republican from the banking committee attended Thursday's hearing. Sen. Mark Kirk of Illinois stopped short of grilling the regulators, but joked with Warren that the two should consider opening their own bank for terrorists and drug lords.

"I think we can make a killing that way, and face no danger of prosecution," he said, smiling.

Copyright 2013 ABC News Radio

Thursday
Feb282013

Senate Could Question HSBC 'Too Big To Jail' Case

Simon Dawson/Bloomberg via Getty Images(WASHINGTON) -- Months after Europe's largest bank dodged a potentially crippling criminal prosecution for alleged money laundering, members of the U.S. Senate will have a chance to ask banking regulators whether some financial institutions really are too big to jail.

Congressional sources told ABC News they expect treasury and banking regulators will be among those called to testify before the Senate Banking Committee next week for a hearing that could answer questions that have been swirling since December, when the Justice Department announced it would not prosecute London-based HSBC for allegedly helping Mexican drug gangs launder money.

The decision not to prosecute HSBC came despite what attorneys there said was compelling evidence that the bank for years helped Mexican drug cartels move cash, concealed transactions involving rogue states such as Iran, and catered to clients alleged to have been involved in financing terrorist operations even after they had been warned to stop.

Justice Department officials reached a record $1.92 billion settlement with the bank, but said it was not prosecuting in part because of what the nation's top criminal prosecutor, Assistant Attorney General Lanny Breuer, called "collateral consequences."

In announcing the settlement, which also forced HSBC to open up its banks to government monitoring, Breuer asked the question rhetorically: "If you prosecute one of the largest banks in the world, do you risk that people will lose jobs, other financial institutions and other parties will leave the bank, and there will be some kind of event in the world economy?"

Sen. Jeff Merkley, an Oregon Democrat, wrote to Attorney General Eric Holder to express his dismay at the decision, saying it "deeply offends the public's sense of justice."

"I am deeply concerned that four years after the financial crisis, the department appears to have set the precedent that no bank, bank employee, or bank executive can be prosecuted even for serious criminal actions if that bank is a large, systemically-important financial institution," Merkley wrote in the pointed, three-page letter.

While the Banking Committee's agenda for the hearing has not been released, advocates for banking reform said they are hoping the senators can begin to piece together how the Department of Justice reached the conclusion that the consequences of prosecuting the bank would damage the economy. One key question, they said, was whether officials from the Treasury Department put pressure on the Justice Department to settle the HSBC case.

"I hope they demand all the memos, all the meeting minutes, open up the process," said Jack Blum, a Washington banking expert. "The case is over now. There is nothing to be gained by keeping it secret. Let's see what happened. The public has the right to know."

Senior officials from both the Treasury and Justice departments agreed to be interviewed by ABC News to address this question in recent weeks, but not to be identified by name. In both cases the officials were adamant that Treasury officials in no way attempted to influence the decision on how to resolve the HSBC case.

Asked how Justice officials reached the conclusion that a prosecution of HSBC would unsettle the global economy, a senior Justice official told ABC News, "We do our own independent analysis."

"We educate ourselves on the size of the company involved, on the business environment in which they operated, and we consult with many people," the official said. "Do we let [Treasury officials] influence our prosecutorial judgment? That's a definite no. There is no improper influence. There is a process of being educated, but absolutely no undue influence."

A senior Treasury official concurred, saying he could recall no meeting in which member of his agency attempted to persuade the Justice Department to settle the case.

Justice officials added that, while they stopped short of a criminal prosecution, they do not believe HSBC got off easy. They were forced to pay a record fine, agree to government monitoring, agree to continue to cooperate with investigators, and to become "the gold standard" in complying with U.S. money laundering laws.

But advocates who want to see greater efforts to stop banks from moving money for those suspected of criminal activity said they have not been impressed. "This thing stinks to high heaven," Blum said.
Stefanie Ostfeld, a policy advisor with Global Witness, an international advocacy organization that works to root out financial crimes and corruption, told ABC News, "If we want to change the behavior of bankers, the punishment needs to fit the crime."

"Senior bankers must be held legally responsible," Ostfeld said. "At the very least, they should be prevented from working in the industry and their bonuses should be clawed back. In the most serious cases, like HSBC, senior bankers should face jail time."

In what may have been a preface of what is to come, Sen. Elizabeth Warren (D-Mass.) took her first crack at the subject during her first Banking Committee hearing earlier this month, when she grilled regulators.

"If they can break the law and drag in billions in profits, and then turn around and settle, paying out of those profits -- they don't have much incentive to follow the law," she said. "It's also the case that every time there's a settlement and not a trial, it means that we didn't have those days and days and days of testimony about what those financial institutions have been up to …Can you identify when you last took [one of] the Wall Street banks to trial?"

Thomas J. Curry, the comptroller of the currency, was among those being questioned. He could not name an instance. "We have not had to do it as a practical matter to achieve our supervisory goals," he said.

Copyright 2013 ABC News Radio

Wednesday
Dec122012

Is HSBC Too Big to Prosecute?

Simon Dawson/Bloomberg via Getty Images(NEW YORK) -- Europe's largest bank will avoid a potentially crippling criminal prosecution for its role in moving cash for known terror groups, Mexican drug cartels and rogue governments such as Iran, instead agreeing to pay a record $2 billion settlement, U.S. Justice Department officials announced at a press conference on Tuesday.

The announcement of the immense fine was overshadowed by efforts to explain why, in one of the clearest cases of criminal money laundering in recent memory, no one would be facing jail time.  Criminal conviction on money laundering violations would have also forcibly prevented HSBC from doing business in the United States.

Lanny Breuer, Assistant Attorney General for the Criminal Division, disputed suggestions that the bank was "too big to be prosecuted," but did not dispute the idea that the Justice Department was looking for ways to penalize the bank without compromising the jobs and beneficial economic activity that the massive bank supports.

"Our goal here is not to bring HSBC down," said Breuer.  "I wouldn't say it's too big to prosecute.  I'm not going to say that. ...I don't think the bank thinks it got off easy."

American officials said the $1.92 billion fine -- the largest ever in such a case -- would send a pointed message to financial institutions that have been lax in weeding out the banking activities of criminals and terrorists.

"The HSBC settlement sends a powerful wake-up call to multinational banks about the consequences of disregarding their anti-money laundering obligations," said Sen. Carl Levin (D-Mich.), whose investigative subcommittee first aired concerns about HSBC's actions in hearings earlier this year.

Critics of the settlement said Tuesday that the government had missed a rare chance to send an unmistakable signal about the threat posed by financial institutions willing to assist drug lords and terror groups in moving their money.

"How much more do you need to know?," said Jack Blum, an international banking expert in Washington, D.C.  "These people managed to cross virtually every line that was crossed.  It was an astonishing amount of criminal behavior."

"I'd say this is a signal to other banks that if you don this kind of stuff you'll get a parking ticket," said Blum.  "You pay the fine, and you move on.  And that's unacceptable."

Breuer said, "I don't think you can make a strong argument that we haven't addressed the underlying issue."

The fine, while large, represents only a fraction of the bank's business -- in 2011 HSBC had net income of $16.8 billion.  Markets responded to the settlement by sending HSBC's stock up.  HSBC Holdings PLC's share price in London was trading 0.5 percent higher.  Analysts said the bank will be able to absorb the cost of the settlements.

According to Shore Capital analyst Gary Greenwood, the penalties are equivalent to around 9 percent of each company's 2012 pretax profits.

The U.S Attorney for the Eastern District of New York, Loretta Lynch, told reporters on Tuesday that HSBC ignored "numerous red flags and warnings about the money laundering risks."

The bank "routinely did business with entities on the U.S. sanctions list," she said, "evading U.S. prohibitions on such transactions by disguising the source of the funds so the payments would go through."

Some of the most egregious activities involved efforts by the bank to assist Mexican drug lords in moving the massive amounts of cash they were receiving through their criminal activity, giving the bank the reputation as the bank of choice for drug gangs, Lynch said.

In a statement, HSBC Group Chief Executive Stuart Gulliver said, "We accept responsibility for our past mistakes.  We have said we are profoundly sorry for them, and we do so again.  The HSBC of today is a fundamentally different organization from the one that made those mistakes."

"Over the last two years," said Gulliver, "under new senior leadership, we have been taking concrete steps to put right what went wrong and to participate actively with government authorities in bringing to light and addressing these matters."

Copyright 2012 ABC News Radio

Tuesday
Dec112012

HSBC to Pay Almost $2B for Money Laundering

Simon Dawson/Bloomberg via Getty Images(NEW YORK) -- HSBC, one of the world's biggest banks, has agreed to pay $1.921 billion for moving money on behalf of Middle East terrorists, Mexican drug cartels and other unscrupulous clients through the American financial system.

In a statement Tuesday, HSBC Group Chief Executive Stuart Gulliver said, "We accept responsibility for our past mistakes.  We have said we are profoundly sorry for them, and we do so again."

"The HSBC of today is a fundamentally different organisation from the one that made those mistakes," Gulliver continued.  "Over the last two years, under new senior leadership, we have been taking concrete steps to put right what went wrong and to participate actively with government authorities in bringing to light and addressing these matters."

The bank said it will continue to cooperate fully with authorities and take further steps to "strengthen its compliance policies and procedures."

Earlier this year, the Senate released its findings from a year-long investigation into the bank's practices.  The nearly 400-page report described in exhaustive detail how HSBC executives repeatedly ignored warning signs from their own compliance officers, and from outside regulators, all of whom watched what they believed to be billions of dollars in suspicious transactions passing through the bank without adequate scrutiny.

The report described how HSBC's Mexican affiliate moved $7 billion in physical U.S. dollars through the bank in a two-year stretch, "raising red flags that the volume of dollars included proceeds from illegal drug sales in the United States."  

It laid out how HSBC's executives ignored warnings that it was providing currency to a Saudi bank alleged by some U.S. officials to be involved in financing al Qaeda.  

It found that two HSBC affiliates sent nearly 25,000 transactions involving $19.4 billion through their bank accounts over seven years without disclosing that the transactions had links to Iran.

And it determined that HSBC altogether failed to monitor some $60 trillion in wire transfer and account activities and amassed a backlog of 17,000 unreviewed account alerts regarding potentially suspicious activity.

Copyright 2012 ABC News Radio

Tuesday
Jul172012

HSBC Exec Resigns During Senate Hearing

JIM WATSON/AFP/Getty Images(WASHINGTON) -- The head of compliance for HSBC told a U.S. Senate committee that he will be stepping down from his job during a hearing over whether his bank, one of the world's largest, violated anti-money-laundering rules by allowing billions from drug cartels.

"I recommended to the group that now is the appropriate time for me and for the bank for someone new to serve as the head of group compliance," said David Bagley, the head of compliance since 2002. "I have agreed to work with the bank's senior management toward an orderly transition of this important role."

The Senate's Permanent Subcommittee on Investigations was grilling Bagley and other current and former HSBC execs over allegedly ignoring warning signs that violent drug gangs in Mexico, suspected terrorist financiers in the Middle East, and other rogue characters and enemy states may have been moving billions of dollars into and out of their vaults.

"In an age of international terrorism, drug violence in our streets and on our borders, and organized crime, stopping illicit money flows that support those atrocities is a national security imperative," said Sen. Carl Levin, D.-Michigan, chair of the subcommittee.

A year-long Senate investigation produced a nearly 400-page report, that describes in exhaustive detail how HSBC executives repeatedly ignored warning signs from their own compliance officers, and from outside regulators, all of whom watched what they believed to be billions of dollars in suspicious transactions passing through the bank without adequate scrutiny.

The report describes how HSBC's Mexican affiliate moved $7 billion in physical U.S. dollars through the bank in a two-year stretch, "raising red flags that the volume of dollars included proceeds from illegal drug sales in the United States." It lays out how HSBC's executives ignored warnings that it was providing currency to a Saudi bank alleged by some U.S. officials to be involved in financing al Qaeda. It found that two HSBC affiliates sent nearly 25,000 transactions involving $19.4 billion through their bank accounts over seven years without disclosing that the transactions had links to Iran.

And it determined that HSBC altogether failed to monitor some $60 trillion in wire transfer and account activities and amassed a backlog of 17,000 unreviewed account alerts regarding potentially suspicious activity.

Jack Blum, a Washington attorney and longtime expert on money laundering, said he has never seen such an extreme case of failure, both by the bank and by regulators.

"This is an across the board, spectacular, total failure," Blum said. "These are not minor, they are gross violations. You have to ask, what kind of management is this? What you come away with is that they cared about the bottom line. They did not care about obeying the law."

HSBC has reported in its public filings that it is the subject of multiple federal and state investigations and that it could be subject to significant fines and criminal penalties. Several of the bank's top executives are scheduled to appear before the Senate subcommittee today to face questions about the investigation and its findings.

"We will acknowledge that, in the past, we have sometimes failed to meet the standards that regulators and customers expect," said a statement released by the bank in response to the Senate's report. "We will apologize, acknowledge these mistakes, answer for our actions and give our absolute commitment to fixing what went wrong." The bank said it has put new leadership in place to try and change its culture and its performance in monitoring transactions.

Advocates with several watchdog groups said that, as egregious as they believe the HSBC case is, numerous banks have failed to police themselves and monitor transactions they handle to make sure they are not helping criminals, terrorists and rogue states launder money.

"We have seen U.S. bank after U.S. bank involved in facilitating or turning a blind eye to criminal money coming in their doors, including the proceeds of corruption, terrorist financing and drug money," said Heather Lowe, Legal Counsel and Director of Government Affairs at Global Financial Integrity.

She and other advocates said the failure is not just inside the banks.

"This hearing is as much about regulatory oversight of the banking sector as a whole as it is about HSBC's alleged facilitation of criminal activity," said Stefanie Ostfeld, a policy advisor with Global Witness. "Hopefully, this hearing will prompt a proper law enforcement response, including appropriate jail time, for banks and individuals who are proved to be involved in this type of criminal activity."

Copyright 2012 ABC News Radio

Tuesday
Jul172012

Senate Probe Finds HSBC Allowed Terrorists, Criminals to Launder Billions

Simon Dawson/Bloomberg via Getty Images(WASHINGTON) -- One of the world's largest banks, HSBC Holdings Plc., for years ignored warning signs that violent drug gangs in Mexico, suspected terrorist financiers in the Middle East, and other rogue characters and enemy states may have been moving billions of dollars into and out of their vaults, according to a year-long U.S. Senate investigation.

"In an age of international terrorism, drug violence in our streets and on our borders, and organized crime, stopping illicit money flows that support those atrocities is a national security imperative," said Sen. Carl Levin, D.-Michigan, who chairs the U.S. Senate's Permanent Subcommittee on Investigations, which undertook the investigation.

The result of the Senate's work, a nearly 400-page report, describes in exhaustive detail how HSBC executives repeatedly ignored warning signs from their own compliance officers, and from outside regulators, all of whom watched what they believed to be billions of dollars in suspicious transactions passing through the bank without adequate scrutiny.

The report describes how HSBC's Mexican affiliate moved $7 billion in physical U.S. dollars through the bank in a two-year stretch, "raising red flags that the volume of dollars included proceeds from illegal drug sales in the United States."  It lays out how HSBC's executives ignored warnings that it was providing currency to a Saudi bank alleged by some U.S. officials to be involved in financing al Qaeda.  It found that two HSBC affiliates sent nearly 25,000 transactions involving $19.4 billion through their bank accounts over seven years without disclosing that the transactions had links to Iran.

And it determined that HSBC altogether failed to monitor some $60 trillion in wire transfer and account activities and amassed a backlog of 17,000 unreviewed account alerts regarding potentially suspicious activity.

Jack Blum, a Washington attorney and longtime expert on money laundering, said he has never seen such an extreme case of failure, both by the bank and by regulators.

"This is an across the board, spectacular, total failure," Blum said.  "These are not minor, they are gross violations.  You have to ask, what kind of management is this?  What you come away with is that they cared about the bottom line.  They did not care about obeying the law."

HSBC has reported in its public filings that it is the subject of multiple federal and state investigations and that it could be subject to significant fines and criminal penalties.  Several of the bank's top executives are scheduled to appear before the Senate subcommittee on Tuesday to face questions about the investigation and its findings.

"We will acknowledge that, in the past, we have sometimes failed to meet the standards that regulators and customers expect," said a statement released by the bank in response to the Senate's report.  "We will apologize, acknowledge these mistakes, answer for our actions and give our absolute commitment to fixing what went wrong."  The bank said it has put new leadership in place to try and change its culture and its performance in monitoring transactions.

Advocates with several watchdog groups said that, as egregious as they believe the HSBC case is, numerous banks have failed to police themselves and monitor transactions they handle to make sure they are not helping criminals, terrorists and rogue states launder money.

"We have seen U.S. bank after U.S. bank involved in facilitating or turning a blind eye to criminal money coming in their doors, including the proceeds of corruption, terrorist financing and drug money," said Heather Lowe, Legal Counsel and Director of Government Affairs at Global Financial Integrity.

She and other advocates said the failure is not just inside the banks.

"This hearing is as much about regulatory oversight of the banking sector as a whole as it is about HSBC's alleged facilitation of criminal activity," said Stefanie Ostfeld, a policy advisor with Global Witness.  "Hopefully, this hearing will prompt a proper law enforcement response, including appropriate jail time, for banks and individuals who are proved to be involved in this type of criminal activity."

Copyright 2012 ABC News Radio

Thursday
Jul122012

Report: HSBC Could Face $1B in Fines over Money Laundering

Simon Dawson/Bloomberg via Getty Images(NEW YORK) -- Sparks could fly at a Senate hearing on Tuesday when HSBC is set to apologize to members of a Senate investigative panel "for failing to have appropriate controls in place" to prevent money laundering and financing of terrorism, reports The Financial Times.

According to the newspaper, analysts estimate the wrongdoing may cost the bank up to $1 billion in fines.

HSBC's apology comes a week after the CEO of Barclays was forced to resign after the bank was hit by a huge fine by U.S. and British regulators for trying to influence the London Interbank Offered Rate (LIBOR) -- the worldwide benchmark for interest rates -- for a period of years dating back at least until 2005.

The LIBOR rate is supposed to reflect the rate at which top banks in London lend to each other.  It is used in the U.S. and other nations to set rates for student loans, mortgage rates, credit cards and car loans.

Copyright 2012 ABC News Radio

Monday
Aug012011

HSBC to Slash an Additional 25,000 Jobs by 2013

HSBC(LONDON) -- HSBC Holdings PLC says it will eliminate an additional 25,000 jobs worldwide by 2013 in an effort to cut costs and increase profits.

Europe's largest bank made the announcement Monday after reporting better-than-expected first-half profits as investment banking revenue continued to decrease. HSBC had previously announced it was slashing 5,000 jobs throughout the United States, United Kingdom, France, Latin America, and the Middle East, bringing the total number of employees out of work to 30,000.

First-half profits rose 36 percent, while the company announced a net income gain of more than $2 billion through June 30 as compared to 2010.

The bank says the cuts are expected to amount to savings of $3.5 billion over the next two years. A spokesperson for HSBC says the company has not ruled out new hires as a result of the cost-cutting moves, but cautioned as to the frequency it will recruit.

Copyright 2011 ABC News Radio







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