HSBC to Pay $1.9B to Settle Money-Laundering Case

5:48 PM, Dec 11, 2012   |    comments
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WASHINGTON (AP, USA TODAY) - HSBC, the British banking giant, says it will pay $1.9 billion to settle a money-laundering probe by authorities in the United States.

The probe 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 settlement, formally known as a deferred prosecution agreement, means HSBC can avoid criminal money laundering and other charges - which could have been a financial death sentence for the bank.

A July report and hearing by the Senate permanent subcommittee in the U.S. alleged foreign HSBC banks "actively circumvented" safeguards at the bank's U.S. arm designed to block transactions involving alleged terrorism, drug trafficking and rogue nations.

One example highlighted in the Senate report showed that two HSBC affiliates routed nearly 25,000 Iran-linked transactions involving $19.4 billion through the bank's U.S. arm over a seven-year period. The transactions allegedly violated U.S. and British law.

HSBC Chief Executive Stuart Gulliver says the bank accepts responsibility for "past mistakes" and is "profoundly sorry for them."

A U.S. law enforcement official said Monday that the investigation will result in HSBC paying $1.25 billion in forfeiture and $655 million in civil penalties. The official was not authorized to speak about the matter on the record and spoke on condition of anonymity.

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