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Stefan Wermuth / Reuters, file
The investigation HSBC -- Europe's largest bank by market value -- has focused on the transfer of funds through the U.S. financial system from Mexican drug cartels and on behalf of nations like Iran that are under international sanctions.
British banking giant HSBC has agreed to pay more than $1.9 billion to U.S. authorities -- the largest penalty ever paid by a bank -- after failing to abide by anti-money laundering and sanctions laws, it said on Tuesday.
The investigation of the bank -- Europe's largest by market value -- has focused on the transfer of funds through the U.S. financial system from Mexican drug cartels and on behalf of nations like Iran that are under international sanctions.
The bank said in a statement that it had also “clawed back” bonuses from a number of senior staff, spent more than $290 million on “remedial measures” and taken steps to limit business in “countries that pose a high financial crime risk.”
The statement added that the bank was also expected to finalize an agreement with the U.K. Financial Services Authority “shortly.”
Stuart Gulliver, chief executive of HSBC Group, said in the statement that the bank was a “fundamentally different organization” now.
"We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again,” he said.
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"While we welcome the clarity that these agreements bring, ensuring the highest standards wherever we do business is an ongoing process,” Gulliver added. “We are committed to protecting the integrity of the global financial system. To this end we will continue to work closely with governments and regulators around the world."
The statement, which included a string of measures taken by the bank to address the problems, also said that an independent monitor would assess HSBC’s progress over the five-year term of the agreement with the Justice Department.
The agreement with the Justice Department noted that HSBC Bank USA and HSBC Group had "provided valuable assistance to law enforcement," according to the bank’s statement.
U.S. and European banks have now agreed to settlements with U.S. regulators totaling some $5 billion in recent years on charges they violated U.S. sanctions and failed to police illicit transactions, Reuters reported.
No bank or bank executives, however, have been indicted as prosecutors have instead utilized deferred prosecutions, the wire service said.
Analyst Jim Antos, of Mizuho Securities, said the statement on Tuesday indicates an extra $420 million for the settlement costs, calling it a "trivial" figure in terms of the company's book value, Reuters reported.
"But in terms of real cash terms, that's a huge fine to pay," Antos added, who rates HSBC a "buy."
U.S. justice department officials are expected to detail the settlement later Tuesday, according to Reuters.
HSBC's settlement comes a day after rival British bank Standard Chartered agreed to a $327 million settlement with U.S. law enforcement agencies for sanctions violations, a pact that follows a $340 million settlement the bank reached with the New York bank regulator in August.
CNBC's Eamon Javers reports the detail on an investigation of HSBC's lending practices.
Medicare fraud case
Such settlements have become commonplace. In what had been the largest settlement until this week, ING Bank NV in June agreed to pay $619 million to settle U.S. government allegations it violated sanctions against countries including Cuba and Iran.
Other banks that have reached settlements over sanctions violations are Credit Suisse Group, Lloyds Banking Group, Barclays and ABN Amro Holding NV.
In the United States, J.P. Morgan Chase & Co., Wachovia Corp. and Citigroup Inc. have been cited for anti-money laundering lapses or sanctions violations.
HSBC's failings date to 2003, when the Federal Reserve Bank of New York and New York state regulators ordered the bank to better monitor suspicious money flows.
In 2010, a consent order from the Comptroller of the Currency (OCC) ordered HSBC to review suspicious transactions moving through the bank, Reuters reported. At the time, the OCC called HSBC's compliance program "ineffective."
In 2008, the U.S. Attorney in Wheeling, West Virginia, began investigating HSBC and how a local pain doctor allegedly used the bank to launder Medicare fraud.
Ultimately, that prosecutor's office came to believe the case was "the tip of the iceberg" in terms of the suspicious transactions conducted through HSBC, according to documents reviewed by Reuters and reported earlier this year.
Reuters and The Associated Press contributed to this report.
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I'm not surprised at all that HSBC was involved in this. I used them to purchase something through Best Buy, and I'll never finance again through either company. Hidden fees galore, and charges for account protection and similar things I blatantly told them I didn't want when I signed up. I hope they go bankrupt.
I'm starting to think that lynching bankers in the street is the only thing that's going to keep them in line; if they aren't screwing over America, they're assisting our enemies.
Well, they won't go bankrupt, but the top echelon should be going to prison! What the hell is "deferred prosecution?? Don't tell me money doesn't buy freedom! I am so sick and tired of bankers committing all kinds of crimes, oil companies committing all kinds of crimes and the Justice Department "collects money". They just keep shoving it into our faces that money talks and B.S. walks....right back to the companies to continue their criminal transactions. This sucks!
After you realize the government is a criminal mafia, it all makes sense.
Well, looks like those HSBC customers will be looking for those extra charges like Skank of Airholes tried to pull on their customers! They lost hundreds of thousands customers when they were going to charge a five dollar a month bank card user fee! Credit Unions-People!!! They pay dividends!
Until they start putting some of the senior bank officers in prison these "lapses" will continue to occur. What this article does not point out is that the fine they are paying does not even come close to wiping out the profits the bank made through its illegal conduct. So long as this trend continues, the banks have nothing to lose by continuing to flaunt banking laws and regulations. They are making a net profit even after the fines and no one is going to prison so there is absolutely no incentive for them to halt their illegal actions. Those responsible for the conduct still collect their huge salaries, even if they did have to give back a small part of their massive bonuses, and do no prison time. At a minimum those at the bank responsible for the lapses should be removed from their positions and barred from ever holding senior positions in the banking industry again. I feel that they really should be facing prison time for their actions, but as a minimum they should be prevented from ever being in a position to allow such conduct in the future. Maybe if those responsible faced losing their livelihood they would think twice about doing this. Barring those responsible from the industry would send a very clear message to anyone else who would contemplate similar illegal conduct that there would be severe personal consequences for them if they got caught.
Again, no one goes to jail. No human person found guilty of large scale money laundering would be free to do as they pleased after paying a fine.
This is proof that corporations are not persons. If their freedom is not restricted as a result of their criminal action, they should not be afforded the same rights as human persons.
But they said they were sorry, so all is forgiven. <sarcasm>
Well, of course, it's not the bank's fault. It's the fault of the people for using the banks in the first place.
@Andy - I also used them for a Best Buy card back in college. I have since paid that card off and ended business. 1.5 years after doing so, I did receive a check in the mail for over $300 for "Identity Protection" services that I never used or asked to be a part of. I believe that the type of scrutiny that is being put on banks and credit card companies is forcing better business practices for both the companies and the users.
yes carolyn..and god help you if you step in the way of the government mafia
They will have to pay $1.9 billion. So, did they still make a profit on all their shady dealings?
Sure they did, and the execs all got bonuses.
They will always make money on the deals, because the fine will just be passed on the the consumer. Take a look at BP, the commercials tout that the company has spent millions to restore the gulf coast of the U.S. but their gas prices are 5-8 cents per gal. higher then any other gas station, so who is cleaning up the gulf coast?
If they didn't make a profit, they wouldn't do it. However, HSBC doesn't have access to the most lucrative market. All they did was take dirty money and launder it until it was clean. It's much more profitable if you have the machine that will launder dirty money until it turns into votes.
Yeah. And they just made all that settlement money back because their investor friends rated the company a buy! It pays to be a crook.
And I'm sure this settlement includes somewhere language limiting future prosecutions to issues other than these they have settled on...which means as soon as the ink is dry on the check, they will go right back doing what they were accused of in the first place.
Gotta love settlements...if they were guilty enough to pay nearly 2billion, they were guilty enough to prosecute the top 1/3 of the management responsible for the laundering and be fined in a civil action...let there be a couple of jurors who knew anyone adversely affected by the Iranians or others in sanctioned country's actions and $2B would be a drop in the bucket...can you say HSBwho?
good for them, all they do is robbing and charging all the make up fee that they made up, now they have to throw out 1.9 billion of greedy money, I hope that they will go brankrupt soon............
If they agreed to pay it, it means they still profited massively from the money laundering, even after paying the fine.
The only crime here, in the eyes of the
mafia bossU.S. authorities, was failing to give the boss his cut.If you committed the same crimes, you would be in jail.
I wonder who's pocket the fines will go into.
I was thinking that myself. Where does that money go? It is a HUGH amount of money. Again to be laundered and reused?
Does it go in to US coffers or some 'lost' committee that gets it? WHO GETS IT? Can someone say? There has to be an official place where "fines" go - doesn't there?
Pack your bags and head to Canada, the new world order is coming. The rich and powerful are slowly taking over this country and their little lackeys, (politicians) are handing it to them on a silver platter. Revolution is the only thing that will stop it.
The politicians are no more than prostitutes who are being pimped by the corporate organizations.
let me know when I am ready to storm washington and throw them out the windows.
It's my guess that HSBC is not the only large global bank doing business in the U.S. and the U.K. and around the world heavily involved in money laundering for terrorist groups and the drug cartels. Those organizations actually kills and murder innocent people all around the world and do so abetted by these financial institutions. I've said it many times before and will continue to state that it is the financial GREED that is causing this cancerous disease in people who run these corporate organizations, forakeing the safety and welfare of the everyday person. We ned to rein them all in.
wow
what a fu cked up united states
"We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again,” he said
what he means by do so again that the next chance they will lie and cheat again and the united states will say oh you bad but its ok we will bail you out
like BP every one tied to the idiocies walked away unscratched
let me see i stole at the age of 12 and did 5 years in a home for boys
but its ok for billionaires to rob, ruin lives, and kill, with no fallout andthey get to ride out the storm in a cotton pillow
we need to scrap our government for being the biggest boobs out there
thanks usa you are showing your true colors again
the brown skid mark on you panties way to go
one thing for sure your lieing cheating and murdering will be brought in front of god, unlike this planet the next life is eternity
we need to stop hiring the rich to try to help the poor you know our government??? they really suck at helping others
example afghanistan: we are helping their people. With what a smart bomb up their cooter? lol lame
Gee what great news....$1.9Billion .. Of course you all realize that the bank itself will NEVER lose a dime as they will simply pass the expense on to ..... THE CUSTOMERS. And the revenue generated by the recoup will end up as bonus money for the execs that ran the scams....The only way to exact any real penalty with these bastards is to lock them up (as should be the case, and would be in any other arena) or take it out in blood.
I have worked 2 times in the 10 years as a consultant at HSBC and they royally stiffed me This just further validates that the management are a bunch of scumbags and HSBC is nothing but a toilet bowl in a crack house. the place is a total dump!!!!!! I really hope they do leave the U.S.!!!!!!!!!!!!!
Gee what great news....$1.9Billion .. Of course you all realize that the bank itself will NEVER lose a dime as they will simply pass the expense on to ..... THE CUSTOMERS. And the revenue generated by the recoup will end up as bonus money for the execs that ran the scams....The only way to exact any real penalty with these bastards is to lock them up (as should be the case, and would be in any other arena) or take it out in blood
Why is not a single person being given jail time? I wonder if the fines even equal the amount of money the banks made from these illegal transactions? Why do big business/corporations get PAID to break the laws even when they get caught? If the penalties are not stiff enough they will continue to make money like they always do. "We are sorry and will never do it again", until you look the other way and we get some new people that we can blame it on.
It was ok when it was just the Mexican drug cartels, but once Iran got involved... Giving money to people that kill others and terrorists SHOULD make you just as guilty since you enabled them. You allowed them to operate and to be able to kill or commit terrorist attacks. Why is not a single person being given jail time?
Where is the truckload of paid RWNJs spewing hate today? It is getting as bad as the elections were with all those paid TV ads. They must not be awake yet and must still be in bed sleeping, living the good life. It is amazing how many of them post during the day when they should be at work "working", but that is their job. I could also set up a couple hundred accounts and a simple program to run through to give "thumbs up", "votes", or "likes" from most internet sites, but that would be cheating.
Do yourself a favor this holiday and go to a major city. Look up at all those nice big and tall buildings. What is on the side of most of those buildings? A bank or insurance company sign or logo. I wonder who has all the money? Who charges middle man fees on basic services that every person uses as a part of society? Pretty hard not to make money when you force people to buy your product or use your services. This is what happens when we allow people to reward themselves as much as they can all without checks or balances.
The punishment should be the loss of their banking license to do business in the U.S. If they can't be trusted in money laundering imagine what they're doing to their customers.
I agree, but then what to do with JP Morgan, BofA and Citi. Once the continuing investigation proves these banks are also involved, liquidate the scumbags, give all the customers their money back, and put the guilty in jail for a LONG, LONG time!
The actual people involved will never spend time in jail. It's not who you know; it's who you blow. Money talk and bull$hit walks.
I hope this is not the end of it. Somebody has to go to jail for this or bank executives will just keep on doing it.
Here's what needs to be explored much more closely ...
"No bank or bank executives, however, have been indicted as prosecutors have instead utilized deferred prosecutions, the wire service said."
Where do the "prosecutors" get the authority to do this? I suppose this decision was made for the "good of our country". This is what we have to bring an end to. We have lawyers in this country perverting our legal system in ways that are destroying us. It's circumvention of law's like this that make the U.S. the most corrupt nation on earth. And we feel we have the right to police other countries. Please. We're clearly the most corrupt country on earth. Legalism is what Jesus railed against. The 99% must rise up and overcome the scum that is polluting our country.
Actually, no, the US is NOT the most corrupt nation on earth. You need to get out and about more...out side of the borders of the USA (Or what ever country). Seriously, this is child's play compared to the real corruption in some other 'high profile' emerging countries. Really, this is NOTHING compared to what else is happening. No other country in the world would have an SEC that would catch this, make it public and actually collect a fine. It may be a disappointment to everyone that the worms didn't get sent to prison, but it's a lot better than what citizens of other countries get from their government.
Count your blessings.
I vehemently disagree. You must be a government employee, or make a living from government contracts. We preach that we're different, that we're humane. But look at the scale of hurt that we wage on people, even within our own borders. I need to get out more? Are you remotely aware of the damage that Wallstreet, banks, and mortgage companies have gotten away with, among others? Are you aware of the damage the military industrial complex does in other countries. Count my blessings, huh? I don't know you, and you don't know me. How are you in a position to tell me to count my blessings? You don't know what pain has been wrought on me by my mortgage company. Do I have any recourse? No. The Consumer Financial Protection Bureau is a complete joke. Our court system is a joke. Please help me understand what blessings I am supposed to be counting. Child's play? Tell that to the millions of people that have been ravaged by big business. What's the future hold when companies like Monsanto can get away with GMOs and killing off small farmers. If the blessings I'm supposed to count are the one's you are putting on my table I want nothing to do with them. I'm doing my best not to call you an ignorant fool. Stay in China where you can appreciate things. As for me, I want the U.S. to live up to what we are intended to be. Not what power mongers believe they should get away with.
Thank you PlzThink. Very well put.
Traveler: just because everyone else jumps off a cliff; should you also jump off that cliff? We do need to clean up our act TODAY. Not tomorrow, NOW. And yes - we are better than this. We should prove it by sending all involved to jail.
Yes, here we go again. The U.S. Govt. catching the big thieves in action and in the end "deferred prosocution".
Get caught with a joint in some states and it could cost you a couple years in a prison.
Get caught stealing a couple hundred dollars worth of goods at Wal-Mart and spend time in jail.
Take a forced pay cut, "to help the company stay profitable", get behind on a bill or more, the banks take your home.
The list of discprency's could go on endlessly, the point being, big money walks, politicians get re-elected.
Wake up people and actuallly do some more research, not just the big news items, but the little things all over as well.
Start putting things together, not blind faith in Government reports and Propaganda.
When you do see all the things as whole, it becomes a very big picture painting big bussiness and the elite rich in a very bad way.
Yes you should be ready to run, the time is getting close, but there is nowhere to run.
If you are not prepared to fight for your very life and the future of your children, you have already lost, and you children will as well.
If you read history, in a 100 years, none of this is gonna matter to anyone. Our history books and religious books are full of stories of corruption and violence and a world full of poor people with hard lives. It's always been that way and it always will be.
There have been revolutions in the streets of almost every country and with few exceptions, someone else just as bad or worse takes their places.
There will always be a struggle for balance and an equilibrium will never be reached.
Here's the good news. You aren't trudging around in freezing mud with dirty clothes and trying to grow enough food to keep you alive. Yes, you are struggling, but most likely, you struggle in a modern home, ride in an automobile, have Internet and lots of other things the earlier 'serfs' didn't have.
Look around you. Everyone's still a SERF; they are just cleaner and better fed serfs.
Go watch Braveheart. It could be worse. Those miserable folks could be you. Think about it...then grab a beer, kick back and watch some HD TV football.
Now I know you work for the government. Braveheart? Boy you are reaching, aren't you. And let's see, his last words were FREEDOM. Are you dense, or what? You consider this freedom?
Druggies both full and partime users only care about their high. Druggies will not care when marijuana permeates our high schools as the thing to do. Those non users who supported the druggies on election day have stabbed the parents who are struggling to keep their children drug free in the back. Thanks a lot for your progressive thinking.
WHY IS THIS NOT CONSIDERED AN ACT OF WAR?!! Aren't we suppose to be at war with terrorists? Aiding and abetting terrorist nations... aren't the drug cartels considered Narco-terrorists? Did any of these banks or their subsidiaries receive bailout funds? They should be banned from operating in the US for at least a decade. Our European allies should follow suit.
"Stuart Gulliver, chief executive of HSBC Group, said in the statement that the bank was a 'fundamentally different organization' now." Really! Is that because the leadership has changed? I think not. Here's my question: When are these senior executives in these large financial institutions going to be held personally responsible and liable for the these transgressions? This guy and everyone of the heads of the big banks involved in the 2008 meltdown should do jail time. Until that happens, these trangressions will proliferate.
Its about time these big banks start getting punished, most big banks, including the American banks have been laundering money for the Cartels, and this is one of the core problems in the drug war. These bankers are directly responsible for our children having easy access to drugs in our schools and the many many deaths in Mexico and other south american countries. They have blood in their hands and should be sent to prison.
$1.9 billion? Big deal, they probably just printed it or created it electronically.. I wish I could do that..
Again, no one goes to jail. No human person found guilty of large scale money laundering would be free to do as they pleased after paying a fine.
This is proof that corporations are not persons. If their freedom is not restricted as a result of their criminal action, they should not be afforded the same rights as human persons.
No matter how you look at it, all the banks are aiding and abetting the enemy. They should not be allowed to escape prosecution! HSBC may be one of the largest, but put JP Morgan, BofA and Citi in the mix and that is a lot of money laundering. But hey, it's only business right! Even the bad guys need to bank somewhere. What a bunch of A-HOLES!!!!!
All the rationalizations for the druggie high are coming out. If our children fall by the wayside of drugs so be it according to the druggie manual of life on the high. All of life is secondary to the druggie high.
Our cut.
Everything is fine when you lie, cheat and steal so long as you share the loot with the law. No one has to go to jail.