HSBC to pay $1.9B to settle money-laundering case

(11 Dec 2012) SHOTLIST
1. Wide of prosecutors entering room
2. SOUNDBITE: (English) Loretta Lynch, US Attorney for Eastern District of New York:
“We are here today to announce the filing of criminal charges against HSBC Bank. Both its US entity – HSBC US – and the parent HSBC Group for its sustained and systemic failure to guard against the corruption of our financial system by drug traffickers and other criminals and for evading US sanctions law. HSBC as you know was one of the largest financial institutions in the world with affiliates and personnel spanning the globe. Yet during the relevant time periods they failed to comply with the legal requirements incumbent on all US financial institutions to have in place compliance mechanisms and safeguards to guard against being used for money laundering.”
3. Wide of news conference showing charts detailing money laundering trade
4. Mid of chart
5. SOUNDBITE: (English) Loretta Lynch, US Attorney for Eastern District of New York:
“As part of its resolution of these charges. HSBC has agreed to forfeit 1.256 billion dollars – the largest forfeiture amount ever by a financial institution for a compliance failure. They have also agreed to pay civil penalties of 665 million dollars to resolve the parallel regulatory actions brought by the Office of the Comptroller of the Currency and the Federal Reserve Bank for a total recovery of over 1.9 billion dollars.
6. Mid of graph showing money laundering trail
7. SOUNDBITE: (English) Lanny Brewer, US Department of Justice:
“In Mexico people have been arrested, I think, for the underlying crime. I don’t think anyone is alleging – this was the scheme – I don’t think anyone is alleging that HSBC was the mastermind of this scheme. Rather, because of their incredibly lax and terrible policies, they permitted themselves to be an instrumental essential element in it, and that’s what we’re holding them accountable for.”
8. Mid of chart showing money laundering process

STORYLINE:
British bank HSBC has agreed to pay 1.9 (b) billion US dollars to settle a New York based-probe in connection with the laundering of money from narcotics traffickers in Mexico, US authorities announced on Tuesday.
The move avoids a legal battle that could further savage the bank’s reputation and undermine confidence in the global banking system.
The announcement was made by US Attorney Loretta Lynch and Assistant Attorney General Lanny Breuer in Brooklyn.
At least 881 (m) million US dollars in drug trafficking proceeds was laundered through HSBC Bank USA, violating the Bank Secrecy Act, US authorities said.
The government also alleges that HSBC intentionally allowed prohibited transactions with Iran, Libya, Sudan and Burma.
The bank also facilitated transactions with Cuba in violation of the Trading With the Enemy Act, according to court documents.
“They failed to comply with the legal requirements incumbent on all US financial institutions to have in place compliance mechanisms and safeguards to guard against being used for money laundering,” US Attorney Loretta Lynch said of HSBC.
It’s the latest scandal to hit banks since the financial crisis started in 2008.
Standard Chartered PLC, another British bank, signed an agreement with New York regulators on Monday to settle a money-laundering investigation involving Iran with a 340 million US dollar payment.
HSBC conceded that its anti-money laundering measures were inadequate and that it has taken big steps in beefing up its controls.

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