HSBC Europe’s biggest bank executives, were subjected to a humiliating onslaught from US senators over revelations that staff at its global subsidiaries laundered billions of dollars for drug cartels, terrorists and pariah states.
The report by a United States Senate committee claimed that HSBC provided banking services to some lenders in Saudi Arabia and Bangladesh believed to have helped fund al-Qaeda and other terrorist groups. It found billions of dollars of cash from its affiliate in Mexico to the US, despite warnings that such sums could involve drugs proceeds.
US politicians grilled HSBC executives and US Treasury officials for failing to guard against money laundering they said benefited Mexican drug lords and terrorist networks, and for their bypassing of sanctions on Iran.
HSBC Bank allowed Mexican drugs lords, rogue states and terrorists to launder money / HSBC chief executive David Bagley resigns
The head of compliance at British banking giant HSBC, David Bagley, resigned in front of a United States Senate subcommittee after it emerged the bank had exposed the US to billions of dollars worth of money laundering, drug trafficking, and terrorist financing.
David Bagley, who has been HSBC head of group compliance since 2002, stepped down before the Homeland Security and Governmental Affairs subcommittee after its findings have been published. The former HSBC executives chief David Bagley has commented : ‘ Despite the best efforts and intentions of many dedicated professionals, HSBC has fallen short of our own expectations and the expectations of our regulators. ‘
David Bagley and other current and former executives of the HSBC bank apologised for lapses but said they weren’t fully aware of illicit transactions flowing through the bank. Senators expressed scepticism that they did not know about problems that persisted for 7 years.
In its over 3 hundred page report, the Senate found the lender allowed affiliates in countries such as Mexico, Saudi Arabia and Bangladesh to move billions of dollars in suspect funds into the US without adequate controls.
HSBC permitted Mexican Drug Kingpins and rogue nations to use their bank services
The HSBC bank has been under investigation for nearly ten years, and faces a massive fine from the United States justice department for lapses in its safeguards. Two US senators Carl Levin and Tom Coburn, who conducted the hearing, said the permanent subcommittee of investigations had examined 1,4 million documents as part of its review and thanked the bank for its cooperation.
The accused HSBC bank has apologised for its lapses and said reforms had been put in place. Paul Thurston, chief executive of retail banking and wealth management, who was sent in to try and clear up HSBC’s Mexican banking business five years ago, said he was terrified by what he found.
HSBC’s Mexican illegal operations moved 7 billion dollars into the bank’s US operations, and according to its own staff, much of that money was tied to Mexican drug traffickers. Before the bank executives testified, the committee heard from Leigh Winchell, assistant director for investigative programs at US immigration and customs enforcement. Winchell said 47 thousand people had lost their lives since 2006 as a result of Mexican drug traffickers.
HSBC bank accused by US Senate of allowing billions of dollars in Mexican drug cartel crush to be laundered
While much of the hearing focused on Mexico, the senators also slammed the bank for dealings in Iran, Syria, Cuba, and other countries on United States sanctions lists. HSBC executives continued to so business with Al Rajhi Bank in Saudi Arabia, even after it emerged that its owners had links to organizations financing terrorism and that one of the bank’s founders was an early financial benefactor of al-Qaida.
Many of HSBC’s breaches of US anti-money laundering relate to its use of bearer share accounts. Under the rules for these accounts, ownership of shares and the income they incur can be passed from person to person in secrecy. HSBC’s US subsidiary had opened more than 2,550 accounts for bearer share corporations.