HSBC illegal money flows

HSBC illegal money flows put regulators in hot seat (07-16 14:29)http://www.topix.com/business/banking/2012/07/hsbc-illegal-money-flows-put-regulators-in-hot-seat-business-11 Current and former bank regulators are likely to face tough questions by a US Senate panel tomorrow about oversight of HSBC Holdings’ efforts to stop illegal money flows between its US and international offices, according to people familiar with the situation, Reuters reports. Comptroller of the Currency Thomas Curry, as well as an Office of the Comptroller of the Currency lawyer and a former OCC official are scheduled to testify before the US Senate Permanent Subcommittee on Investigations, which is releasing a 450-page report tomorrow exposing how money from high-risk corners of the world, including the Middle East and Mexico, moved through the British bank. The current and former OCC officials are expected to face questions about how the office, a principal regulator of HSBC’s US operations, monitored the bank's anti-money laundering compliance, according to these people. A Reuters investigation has found persistent and troubling lapses in the bank's anti-money laundering compliance since 2010. Executives from HSBC and its US unit also are scheduled to testify about how the bank, after years of run-ins with US authorities over alleged anti-money laundering lapses, has cleaned up its act since the OCC issued HSBC a consent order on money laundering in 2010. The hearing marks another chapter in the decade-long effort by regulators to rein in illegal money flows at HSBC. The Senate probe is one of a number of investigations HSBC is confronting. Two US Attorney's offices have probed multiple lapses inside the bank, including the movements of bulk cash in transactions tied to Mexican foreign-exchange dealers, which are widely suspected of laundering drug-trafficking proceeds, according to documents reviewed by Reuters. An investigation by the Office of Foreign Assets Control is also examining how HSBC handled funds tied to Iran, according to an HSBC regulatory filing in May. OFAC's inquiry extends beyond HSBC. Other banks that have agreed to fines as part of probes conducted by OFAC and the district attorney in Manhattan include Lloyds Banking Group, Credit Suisse Group and Barclays. In an emailed statement, an HSBC spokesman said: “We will be discussing a number of compliance issues with members of the subcommittee, including past [anti-money laundering] 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 organization's structure to bring this about.''