Published: Tue, December 12, 2017
Finance | By Kristine Clayton

HSBC announces end to suspended sentence for Mexican cartel case

HSBC announces end to suspended sentence for Mexican cartel case

"We've seen these deferred prosecution agreements can be extended, as we saw with Standard Chartered".

HSBC on Monday said its deferred prosecution agreement with the U.S. Department of Justice has expired, marking an end to the threat of further punishment for lapses in its anti-money laundering controls.

The Justice Department had accused HSBC of not implementing proper systems to catch money laundering, allowing at least $881 million in proceeds from the sale of illegal drugs to flow through the USA financial system.

HSBC lived up to all of its commitments, and, therefore, under the DPA, the Department of Justice will file a motion with the US District Court for the Eastern District of NY seeking the dismissal of the charges deferred by the agreement.

Lax money laundering controls at HSBC allowed two cartels - one each in Mexico and Colombia - to move US$881 million in drug proceeds through the bank over the second half of the last decade, according to documents in the case.

Following its signing of the DPA in 2012, HSBC embarked on a worldwide programme of upgrading its compliance systems to USA standards, raising its spending to more than US$1 billion a year.

The 2012 settlement was related to the alleged laundering of around $881m for Mexican drug lords as well as completing transactions for countries subject to United States sanctions, including Iran.

Authorities brought the DPA to avoid any prosecution which if it led to an indictment, would have meant the government of the USA could not conduct business with the bank any longer.

Under the terms of the agreement an independent compliance monitor was appointed in July 2013 to produce annual reports on HSBC's progress in improving its anti-money laundering and sanctions compliance. It further stated that DOJ will soon file a demand in USA court asking for the dismissal of the charges.

Gulliver continued by say the bank was committed to doing its part in protecting the global financial system's integrity, and further improvement to its own contributions and capability toward this partnership. This arrangement will continue for some more period, the bank informed.

Like this: