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HSBC, Standard Chartered Face Korea Review After U.S. Probes

HSBC Holdings Plc (HSBA) and Standard Chartered Plc’s South Korean operations will be reviewed by local regulators after U.S. authorities accused the banks of money laundering.

The Financial Supervisory Service will review the U.K. lenders’ branches to determine whether they properly reported suspicious transactions and confirmed clients, it said in an e- mailed statement today, without elaborating.

New York’s financial regulator this week claimed that London-based Standard Chartered (STAN) broke U.S. sanctions by processing $250 billion of deals with Iranian banks subject to sanctions. HSBC set aside $700 million last month after the U.S. Senate found that the bank gave terrorists and criminals access to the U.S. financial system.

The review will begin this month as a precautionary step, Kwon In Won, director-general at the FSS’s supervision coordination department, said by phone in Seoul. There’s no evidence of wrongdoing by the two banks in Korea, he added.

HSBC will provide all the information the FSS is requesting on a timely basis and give any other support needed, the bank said in an e-mailed reply to Bloomberg News questions. Standard Chartered will cooperate fully with the regulator, it said in an e-mailed reply.

The South Korean unit of Standard Chartered had 367 branches as of March, according to the FSS data. London-based HSBC operates 11 branches in the country.

Standard Chartered Chief Executive Officer Peter Sands yesterday rejected the Department of Financial Services’s claims that the bank broke U.S. sanctions. There are “no grounds” for revoking the lender’s license to operate in New York, Sands said on a conference call with reporters.

HSBC apologized to investors last month for compliance failings.

To contact the reporter on this story: Seonjin Cha in Seoul at scha2@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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