HSBC Contrite over Laundering Report

By Conte, Andrew | Tribune-Review/Pittsburgh Tribune-Review, July 17, 2012 | Go to article overview

HSBC Contrite over Laundering Report


Conte, Andrew, Tribune-Review/Pittsburgh Tribune-Review


WASHINGTON -- The top compliance officer at HSBC announced his resignation on Tuesday as other top bank officials and the U.S. Comptroller expressed regret in response to a scathing Senate report about lax money-laundering prevention.

Officials from London-based HSBC Holdings appeared at a hearing by the Senate permanent subcommittee on investigations, which issued the report. David Bagley, the top compliance officer at the bank, announced his intention to resign, saying it was the "appropriate time."

"We deeply regret and apologize for the fact that HSBC did not live up to our own expectations or the expectations of our regulators, our customers, our employees and the general public," said Irene Dorner, president and CEO of HSBC Bank USA.

"We have made fundamental changes in governance, culture, training and funding to ensure that we can effectively deter illicit use of our bank," she said.

The Senate report faulted the U.S. Office of the Comptroller of the Currency for not acting swiftly enough on oversight of HSBC.

Thomas Curry, who became comptroller this year, agreed with the findings, saying the agency should act when problems start creeping up, rather than waiting until violations occur.

The comptroller's office also should increase the use of regulatory actions, he said, such as cease-and-desist orders.

"I would like to see, going forward, a much more aggressive posture," Curry said of his office.

HSBC increased compliance spending nine-fold over two years to $244 million in 2011, and it has turned away 14,000 customers who did not meet the bank's risk appetite, Dorner said. The financial institution is in the process of closing thousands of Cayman Islands accounts set up through its Mexican affiliate.

Globally, the bank will adopt the highest standards among the 80 jurisdictions worldwide where it operates, said Stuart Levey, HSBC's chief legal officer. …

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