The Cease and Desist Order to HSBC
Regulators from the Office of the Comptroller of the Currency (OOC) are zooming in on the loan and transaction history of HSBC. The regulators from the OOC have found the banking giant to have “severe deficiencies in its anti-money laundering controls, including $60 trillion in transactions and 17,000 accounts flagged as potentially suspicious”. The enormous international bank conducts business all over the world and has opened its doors in 85 countries including Mexico and Saudi Arabia which are two high risk countries. Gang wars and terrorism are two common activities in such parts of the world and may also have been possibly funded from HSBC loans.
However, the OOC are working with HSBC to reform the banks Anti-Money Laundering (AML) program. The Subcommittee of the Office of the Comptroller of the Currency remains skeptical that HSBC is making strides in the right direction. According to the Financial Crime Conference, “HSBC told the subcommittee of several initiatives it is taking to improve its AML program”. David Bagley currently serves as the Chief Compliance Officer but there are talks of him stepping down in this turbulent time with HSBC. TheOOC has issued a Cease and Desist Order against HSBC Bank for violating the Bank Secrecy Act (BSA) and ordering “a plan containing a complete description of the actions that are necessary and appropriate to achieve full compliance” within 60 days. The plan also calls for HSBC to “recruit, hire, appoint, and retain a qualified, permanent Regional Compliance Officer (“RCO”) and a qualified, permanent BSA Officer. The plan shall include job descriptions, proposed salary ranges, and the qualifications sought by the Board”. No fines have been put into place as yet, but HSBC is facing strict regulation from the OOC that must be completed in a timely fashion.
As an official of the government, I believe it our responsibility to see these changes carried out and that HSBC does not get away with such injustices. There must be justice done and it is the government’s duty to enforce it.
“Archived News Articles”. Office of the Comptroller of the Currency. October 7 2010. Online. April 8 2013.
http://www.occ.gov/topics/laws-regulations/legal-news-archive.html
“Levin panel’s report of HSBC criminality bares weak OCC supervision as soft underbelly of US financial
crime”. Financial Crime Conference. 2013. Online. April 8 2013.
http://www.financialcrimeconference.com/levin-panels-report-of-hsbc-criminality-bares-weak-occ
supervision-as-soft-underbelly-of-us-financial-crime/#!prettyPhoto/0/
Protess, Ben and Silver-Greenberg, Jessica. The New York Times. “HSBC to Pay $1.92 Billion to Settle
Charges of Money Laundering”. December 10 2012. Online. April 8 2013.
http://dealbook.nytimes.com/2012/12/10/hsbc-said-to-near-1-9-billion-settlement-over-money
Nasiripour, Shahien. “HSBC Compliance Officer Quits after Hearing”. The Financial Times. July 17 2012. Online. April 8 2013.
http://www.ft.com/cms/s/0/5267a2ce-d02b-11e1-99a8-00144feabdc0.html#axzz2PuADLcVf
Jessica, I thought it was particularly interesting when you speak about the obvious lack of controls on AML laws that OCC failed to conduct concerning the failure to monitor suspicious activities including $60 trillion in wire transfers and activity coupled with a backlog of 17,000 unreviewed account alerts regarding potential suspicious behavior.
According to the OCC website, the OCC is responsible for the following concerning AML laws, “prescribes regulations, conducts supervisory activities and, when necessary, takes enforcement actions to ensure that national banks have the necessary controls in place and provide the requisite notices to law enforcement to deter and detect money laundering, terrorist financing and other criminal acts and the misuse of our nation’s financial institutions.”
Because HSBC used the U.S. bank as a gateway for illicit money during a time where terriorism and drug trafficking is of high risk, it was their regulator’s OCC’s one mission to challenge these wrongdoings and take action. I’m speculative over how OCC’s weak AML system has been accepted for years. Articles show HSBC’s behavior has been occuring for several years back as far as 2006. How can OCC have turned such a blind eye?
Sources:
“Compliance/BSA Home.” OCC: BSA/AML Examinations. Senator Carl Levin, June-July 2012. Web. 16 Apr. 2013.
“News and Issuances.” OCC: Bank Secrecy Act/Anti-Money Laundering: Guidance on Accepting Accounts From Foreign Embassies, Consulates and Missions. Office of the Comptroller of the Currency, n.d. Web. 16 Apr. 2013.