Report: HSBC 'Allowed Money Laundering'

A report by Senate says HSBC Bank USA "exposed the United States Mexican drug money" and suspicious funds.

A US report found that lax controls HSBC, Europe's largest bank, meant Mexican drug cartels were to launder billions of dollars for seven years.

The investigation by the Senate says US regulator knew HSBC Holdings PLC had a poor system detect problems but failed to action.

The report the Senate Permanent Subcommittee also found some bank affiliates skirted US government bans financial transactions with Iran and other countries.

And HSBC's US division provided money and banking services to some banks Saudi Arabia and Bangladesh believed to helped fund al Qaeda and terrorist groups.

HSBC released a statement saying executives will offer a formal apology a hearing into the matter on Tuesday.

"We will apologise, acknowledge these mistakes, answer our actions and give our absolute commitment fixing what went ," the bank said in a statement.

The US Justice Department said it conducting a criminal investigation HSBC's operations but declined to confirm that the bank is settlement talks.

HSBC's net income last year was £10.7bn ($16.8bn). It operates about 80 countries around the . Its US division is the top 10 banks operating in the United States. It has assets of roughly £134bn ($210bn) its US operations.

Money laundering profits from the trafficking of drugs, arms or other illicit activities and passes them bank accounts to disguise the illegal activity.

The bank used its US operation a "gateway" into the country's financial system other HSBC affiliates, Senator Carl Levin, the subcommittee's chairman said.

Because of lax controls money laundering, HSBC Bank USA "exposed United States to Mexican drug money" and other suspicious funds, Mr Levin said.

The report says the drug cartels money through the bank's US division from 2002 2009.

" an age of international terrorism, drug violence in our streets and our borders, and organised crime, stopping illicit money flows that support atrocities is a national security imperative," Mr Levin said.

The bank said its statement that it changed its senior management last year and has changes to strengthen its compliance rules to prevent money laundering.

"We...recognise that our controls could and should have stronger and more effective in to spot and deal unacceptable behaviour," the statement said.


Adapted from: Sky News, July 17, 2012.