HSBC to Apologize at Hearing on Money Laundering, Memo Shows
Stock Chart for HSBC Holdings PLC (HSBA)
HSBC Holdings Plc (HSBA) will apologize at a July 17 U.S. Senate hearing for anti-money laundering controls that weren’t effective enough, according to an internal memo obtained by Bloomberg News.
“We failed to spot and deal with unacceptable behavior,” Chief Executive Officer Stuart Gulliver said in the note sent to employees yesterday, referring to the period between 2004 and 2010. “It is right that we be held accountable and that we take responsibility for fixing what went wrong.”
Europe’s largest bank will be questioned by U.S. lawmakers about two weeks after a record fine was levied against Barclays Plc (BARC) for rigging interest rates and its ex-CEO Robert Diamond was grilled in the U.K. HSBC (5), which has doubled spending on compliance since 2010 to curtail illicit money transfers, may also face a “hefty fine,” Mizuho Securities Asia Ltd. said.
“The real issue here is that the U.S. agencies have cited HSBC several times for being deficient at money-laundering practices as long ago as 2003,” Jim Antos, a Hong Kong-based analyst at Mizuho, said by telephone today. “Nine years later, the situation is apparently not yet under control.”
U.S. prosecutors may take criminal or civil enforcement measures involving the London-based bank amid an investigation into terrorist funding, HSBC said in February. The lender has more than tripled the size of a U.S. compliance team and said it will exit businesses it sees as too risky.
Gareth Hewett, a Hong Kong-based spokesman for the lender, declined to comment on the contents of the memo. The bank has been “fully cooperating” with the Senate Permanent Subcommittee on Investigations and with U.S. regulators on the issue, and next week’s testimony will include a discussion of measures taken by HSBC to improve compliance, he said.
Shares of HSBC were little changed at HK$67.65 as of 11:39 a.m. local time in Hong Kong trading. The stock has gained 15 percent this year, surpassing the 5 percent advance in the equity benchmark Hang Seng Index.
HSBC’s North American units reached agreements in 2010 with the Office of the Comptroller of the Currency and the Federal Reserve Board to make changes to comply with a U.S. law that combats money laundering.
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