British bank HSBC is hit with $1.9B in U.S. fines over money laundering claims

American authorities on Tuesday cited “astonishing” dysfunction at the British bank HSBC and said that it had helped Mexican drug traffickers, Iran, Libya and others under U.S. suspicion or sanction to move money around the world.
By LARRY NEUMEISTER and CHRISTINA REXRODE Modified: December 11, 2012 at 9:32 pm •  Published: December 12, 2012
Advertisement
;

For the government not to go a step further and prosecute was “beyond obscene,” said Bill Black, a former U.S. regulator for the Office of Thrift Supervision who now teaches at the University of Missouri-Kansas City.

“Regulators are telling us, ‘Yes, they're felons, they're massive felons, they did it for years, they lied to us, and they made a lot of money … and they got caught red-handed and they're gonna walk.'”

Black disputed the government's concern that indicting HSBC could take down the financial system.

Breuer defended the government's agreement with HSBC. He said U.S. employees in particular seemed duped.

Court documents showed that the bank let over $200 trillion between 2006 and 2009 slip through relatively unmonitored, including more than $670 billion in wire transfers from HSBC Mexico, making it a favorite of drug cartels and money launderers. .

Besides forfeiting $1.25 billion in its deal with the government, HSBC also agreed to pay $665 million in civil penalties, including $500 million to the Office of the Comptroller of the Currency and $165 million to the Federal Reserve.

The U.S. said the United Kingdom's Financial Services Authority was pursuing a separate action.