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Wednesday, December 7, 2016

HSBC’s Money Laundering Lapses, By The Numbers

HSBC’s Money Laundering Lapses, By The Numbers

by Cora Currier, ProPublica.

 

This week a Senate investigation detailed that HSBC had lax controls against money-laundering and often ignored warnings about clients with ties to drug cartels and terrorists.

The bank is also reportedly nearing a settlement with the Justice Department, which has two criminal investigations into whether HSBC was complicit in money-laundering and tax evasion.The federal regulator that should have been keeping tabs on all this, the Office of the Comptroller of the Currency, also came under fire for “systemic weaknesses” in its oversight of banks’ anti-money laundering procedures.

The report reaches back more than a decade, and in testimony in front of the Senate this week, the bank apologized and vowed it has recently overhauled its anti-money-laundering efforts. The bank’s head of compliance stepped down this week. But the Senate report notes that HBSC made similar promises of reform back in 2003 when it was cited by regulators for poor oversight of suspicious transactions. HSBC declined to comment further on the report or on the DOJ’s ongoing investigation.

There are lot of blunders and blind spots detailed in the Senate’s 335-page takedown. Here’s a rundown — in each instance, we’ve linked to the relevant page in the report.

17,000: The backlog of unreviewed, potentially suspicious activity alerts at HSBC’s U.S. arm as uncovered by government regulators in 2010.

200: Number of compliance staff in bank’s U.S. branch between 2006 and 2009, of which a smaller group was charged with making sure the bank was following anti-money-laundering rules. HBUS had millions of accounts, and more than 16,000 employees overall, and according to the report, kept compliance staff small as a cost-cutting measure.Members of the anti-money-laundering group told investigators that understaffing was a key problem.

85: Number of problems with the anti-money-laundering efforts at bank’s U.S. arm red-flagged by the OCC between 2005 and 2010. That was a third more than the next-closest major bank.

0: number of enforcement actions the OCC took in that time period.

3: number of years, from 2006 to 2009, for which HSBC’s U.S. branch didn’t do any money-laundering monitoring for transactions with HSBC banks in other countries.

15 billion: Total value of U.S. dollar bills (as in paper money) the bank accepted as part of bulk-cash transactions from foreign HSBC banks during that period, with no anti money-laundering controls.

Concerns about HBMX, the bank’s Mexican arm

7 Billion: U.S. dollars exported from 2007-2008 from HBMX accounts to HSBC’s U.S. accounts. At the time, both American and Mexican officials raised concerns that such a volume was only possible if it included illegal drug money.

1: Rank of HBMX in repatriation of U.S. dollars from Mexico for those years. HBMX is only the 5th largest bank in Mexico.

50,000: Number of clients in 2008 with U.S. dollar accounts at an HBMX shell operation in the Cayman Islands.

75: Estimated percentage of those accounts for which HBMX had incomplete information on the account holder.

15: Estimated percentage of such accounts for which the bank had no account holder information. (In 2009, HBMX closed 9,000 Cayman U.S. dollar accounts, but continues to allow new ones to be opened there).

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