HSBC allowed some B’desh banks to fund terrorist groups
Dhaka, July 17 (UNB) – Lax controls at the US division of the big international bank HSBC allowed some banks in Bangladesh to fund some terrorist groups like al Qaida, an investigation has found.
The report by a US Senate committee claimed that HSBC provided banking services to some lenders in Saudi Arabia and Bangladesh believed to have helped fund al Qaida and other terrorist groups.
The US Senate panel accused global banking giant HSBC of exposing the country's financial system to various terror financing, money laundering and drug trafficking activities with transactions worth billions of dollars, due to poor risk control systems at the bank.
Apart from banks in Bangladesh, the HSBC has indulged in various questionable transactions with entities from other countries like Mexico, Iran, North Korea, Saudi Arabia, Syria, Cuba, Sudan, Burma, Cayman Islands, Japan and Russia, the US Senate's Permanent Sub-committee on Investigations has said after a year-long probe into the affairs of the global banking major.
Reacting to the report from the Senate Sub-Committee, HSBC authorities said in a statement that it would apologise for failing to meet regulatory and customer standards in the past.
The bank said it recognises that its "controls could and should have been stronger and more effective in order to spot and deal with unacceptable behaviour."
The Senate Sub-Committee last night released a 17-page summary report of its probe. The entire 330-page report, prepared after a year-long investigation into HSBC, along with more than 100 other documents including bank records and internal emails, is being released at a hearing here on Tuesday.
The hearing would include testimony from HSBC officials and federal regulators, the sub-committee Chairman and Senator Carl Levin said in a statement.
The sub-committee said that HSBC used its US bank (HBUS) as a gateway into the US financial system for some HSBC affiliates around the world to provide dollar-denominated services to clients "while playing fast and loose with US banking rules.
The probe further said that "due to poor AML controls, HBUS exposed the US to Mexican drug money, suspicious travelers cheques, bearer share corporations, and rogue jurisdictions."
In his instant reaction to the report, HSBC'S head of group compliance David Bagley said he was planning to step down.
The report also found that HSBC, which is among the 10 largest banks in the US, moved billions of dollars of cash from its affiliate in Mexico to the US, despite warnings that such sums could involve drugs proceeds.
The US Justice Department said it is conducting a criminal investigation into HSBC's operations but declined to confirm that the bank is in settlement talks.
The report comes at a troubling time for a banking industry reeling from a multi-country probe into the manipulation of global benchmark rates. Last month, rival British bank Barclays agreed to pay a $453 million fine to settle a US-British probe into the rigging of the benchmark interest rate known as the London interbank offered rate, or Libor.
Some of the money that moved through HSBC was tied to Iran, the report said, which would violate US prohibitions on transactions linked to it and other sanctioned countries.
Between 2001 and 2007, more than 28,000 transactions were identified by an outside auditor for HSBC that potentially could have run afoul of laws that prohibit transactions with sanctioned countries. Of those, 25,000 involved Iran. A smaller number required additional analysis to determine if violations of US regulations had occurred, the report said.
The report by a US Senate committee claimed that HSBC provided banking services to some lenders in Saudi Arabia and Bangladesh believed to have helped fund al Qaida and other terrorist groups.
The US Senate panel accused global banking giant HSBC of exposing the country's financial system to various terror financing, money laundering and drug trafficking activities with transactions worth billions of dollars, due to poor risk control systems at the bank.
Apart from banks in Bangladesh, the HSBC has indulged in various questionable transactions with entities from other countries like Mexico, Iran, North Korea, Saudi Arabia, Syria, Cuba, Sudan, Burma, Cayman Islands, Japan and Russia, the US Senate's Permanent Sub-committee on Investigations has said after a year-long probe into the affairs of the global banking major.
Reacting to the report from the Senate Sub-Committee, HSBC authorities said in a statement that it would apologise for failing to meet regulatory and customer standards in the past.
The bank said it recognises that its "controls could and should have been stronger and more effective in order to spot and deal with unacceptable behaviour."
The Senate Sub-Committee last night released a 17-page summary report of its probe. The entire 330-page report, prepared after a year-long investigation into HSBC, along with more than 100 other documents including bank records and internal emails, is being released at a hearing here on Tuesday.
The hearing would include testimony from HSBC officials and federal regulators, the sub-committee Chairman and Senator Carl Levin said in a statement.
The sub-committee said that HSBC used its US bank (HBUS) as a gateway into the US financial system for some HSBC affiliates around the world to provide dollar-denominated services to clients "while playing fast and loose with US banking rules.
The probe further said that "due to poor AML controls, HBUS exposed the US to Mexican drug money, suspicious travelers cheques, bearer share corporations, and rogue jurisdictions."
In his instant reaction to the report, HSBC'S head of group compliance David Bagley said he was planning to step down.
The report also found that HSBC, which is among the 10 largest banks in the US, moved billions of dollars of cash from its affiliate in Mexico to the US, despite warnings that such sums could involve drugs proceeds.
The US Justice Department said it is conducting a criminal investigation into HSBC's operations but declined to confirm that the bank is in settlement talks.
The report comes at a troubling time for a banking industry reeling from a multi-country probe into the manipulation of global benchmark rates. Last month, rival British bank Barclays agreed to pay a $453 million fine to settle a US-British probe into the rigging of the benchmark interest rate known as the London interbank offered rate, or Libor.
Some of the money that moved through HSBC was tied to Iran, the report said, which would violate US prohibitions on transactions linked to it and other sanctioned countries.
Between 2001 and 2007, more than 28,000 transactions were identified by an outside auditor for HSBC that potentially could have run afoul of laws that prohibit transactions with sanctioned countries. Of those, 25,000 involved Iran. A smaller number required additional analysis to determine if violations of US regulations had occurred, the report said.
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