By Carrick Mollenkamp
July 9 A U.S. Senate panel investigating
breakdowns in money laundering prevention at British bank HSBC
Holdings Plc will detail the findings of its inquiry at
a hearing on July 17.
The U.S. Senate Permanent Subcommittee on Investigations
said in a scheduling announcement on Monday that a hearing will
focus on how high-risk bank clients gained access to the U.S.
The panel has been investigating HSBC for months as part of
an effort by the Senate panel to probe shadowy money flows. The
title of the hearing is "Vulnerabilities to Money Laundering,
Drugs, and Terrorist Financing: HSBC Case History."
In an emailed statement, HSBC spokesman Robert Sherman said
the bank will be discussing a number of compliance issues with
the subcommittee, in particular how it resolved issues.
"The Board and leadership of HSBC are fully committed to
implementing the highest standards and have already made
significant changes to our organization's structure to bring
this about," Sherman said.
Reuters originally reported in January that the British bank
was under Senate investigation. Reuters
subsequently reported in May that the bank has been the subject
of an investigation by two U.S. Attorney offices.
HSBC also is under investigation by the U.S. Securities and
Exchange Commission and the Justice Department. Those probes
also are examining whether the HSBC was vulnerable to illicit
funds moving through the bank.
HSBC is one of the world's largest banks with operations in
more than 80 countries and territories. In 2003 and 2010, U.S.
bank regulators ordered the bank to improve its anti-money
laundering systems and personnel, according to enforcement
actions by the Federal Reserve Bank of New York and the Office
of the Comptroller of the Currency, a Treasury Department unit.
Documents reviewed by Reuters that are part of two U.S.
Attorney's office probes allege that from 2005, the bank
violated anti-money laundering laws by not reviewing billions of
dollars in transactions for links to drug trafficking, terrorist
financing or other criminal activity.
Officials from HSBC and the Comptroller of the Currency, a
lead regulator of the bank's U.S. operations, will testify
before the Senate panel, the subcommittee said on Monday. An
HSBC official likely will be grilled on how the bank dealt with
high-risk clients who moved money through HSBC and the U.S.
Earlier this year, the bank named former top U.S. Treasury
Department official Stuart Levey as chief legal officer. Levey
had specialized in combating terrorism financing. It is not
known whether Levey will testify before the panel. The hiring of
a top former Treasury official signaled the bank's desire to
show it was committed to combating illegal financing.
The Senate panel, chaired by Sen. Carl Levin, has issued a
number of investigative reports in recent years to examine money
laundering and tax evasion in the U.S. financial system. In
2011, the panel examined how Wall Street firms and banks
profited from the boom and bust of the U.S. housing market.
In the statement, HSBC said it is cooperating in the Senate
investigation and with U.S. regulatory authorities.