HSBC: may face criminal charges for transactions

Tue Feb 28, 2012 3:53pm IST

The HSBC building is seen in the Canary Wharf business district, in East London September 24, 2010. REUTERS/Stefan Wermuth/fILES

The HSBC building is seen in the Canary Wharf business district, in East London September 24, 2010.

Credit: Reuters/Stefan Wermuth/fILES

Related Topics

Stocks

   
Rajalakshmi (C), 28, smiles after winning the Miss Wheelchair India beauty pageant in Mumbai November 26, 2014. REUTERS/Danish Siddiqui

Miss Wheelchair India

Seven women from across India participated in the country's second wheelchair beauty pageant, which aims to open doors for the wheelchair-bound in modelling, film and television, according to organisers  Slideshow 

REUTERS - HSBC Holdings Plc (HSBA.L) said on Monday it will likely face criminal or civil charges from an expanding investigation into its ties to allegedly illegal money transactions, including some tied to Iran.

The disclosure in a regulatory filing shows the increasingly serious nature of inquiries into the London-based bank's business.

HSBC already is the subject of multiple U.S. law-enforcement probes for ties to illegal money transactions. Monday's filing was the first time the bank disclosed that Iranian transactions are under scrutiny and that it could face a criminal charge.

The bank's HSBC USA Inc unit said investigations are being conducted by the Justice Department, the district attorney in Manhattan, two Treasury department agencies and the Federal Reserve. It said those inquiries were examining "historical transactions involving Iranian parties and other parties subject to" U.S. economic sanctions. Financial institutions doing business in the United States are prohibited from aiding sanctioned countries or banks.

In recent years, the Manhattan district attorney and Justice Department have settled with a number of European banks that operated transfer systems for Iranian clients. Banks aided clients trying to improperly move money by removing, or stripping out, references that could tip off a U.S. bank system to a transaction tied to Iran or another sanctioned state.

HSBC disclosed the new details in a filing with the U.S. Securities and Exchange Commission as part of the bank's 2011 annual results. HSBC USA provides commercial and consumer banking and operates 461 branches. The bank previously said in securities filings that it was facing inquiries and it had received grand jury subpoenas.

Last month, Reuters reported that HSBC was under investigation by a U.S. Senate panel in a money-laundering inquiry. In January, HSBC named former top U.S. Treasury Department official Stuart Levey as its chief legal officer. Levey had specialized in combating terrorism financing before leaving the Treasury Department last year.

In the filing on Monday, HSBC also highlighted the serious nature of the U.S. investigations. It disclosed that it is likely "there will be some form of formal enforcement action, which may be criminal or civil in nature."

In a statement, an HSBC spokesman said: "The change in the disclosure reflects the fact that the investigations have developed over the course of the year, and we can now say that some form of formal enforcement action is likely and that it may be criminal or civil in nature."

The bank suggested in the SEC filing that the U.S. inquiries could result in a deferred prosecution. That type of agreement with prosecutors requires a bank to acknowledge criminal wrongdoing and leaves the door open for further prosecution if more violations occur.

In its filing, the HSBC unit said: "Investigations of several other financial institutions in recent years ... have resulted in settlements. Some of those settlements involved the filing of criminal charges, in some cases including agreements to defer prosecution of these charges, and the imposition of fines and penalties."

HSBC added that the fines and penalties paid by other institutions were "significant." The bank said in the securities filing it is "cooperating fully and engaging in efforts to resolve these matters."

(Reporting by Carrick Mollenkamp; editing By Alwyn Scott and Andre Grenon)

FILED UNDER:

SAARC Summit

REUTERS SHOWCASE

E-Commerce Boom

E-Commerce Boom

Online grocers come up trumps in India's e-commerce boom   Full Article 

Reuters Poll

Reuters Poll

GDP growth to slow to 5.1 pct, but no rate cut yet  Full Article 

Oil Prices Fall

Oil Prices Fall

Oil at four-year low as OPEC production cut looks unlikely  Full Article 

Hughes Dies

Hughes Dies

Australia batsman Hughes passes away aged 25  Full Article 

Jamini Roy

Jamini Roy

Photo Gallery – Bengali household name Jamini Roy’s paintings  Full Article 

Google in Europe

Google in Europe

Insight - Behind Google's Europe woes, American accents  Full Article 

India-focused Funds

India-focused Funds

India-focused hedge funds up over 40 pct YTD - HFR  Full Article 

Trade Deal

Trade Deal

WTO postpones trade deal by a day after last-minute objection.  Full Article 

Land Disputes

Land Disputes

Disputes over land for industry on the rise in India, angering locals - charities  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage