HSBC Triples U.S. Team to Step Up Battle on Money Laundering

HSBC Holdings Plc, Europe’s largest bank, has more than tripled its U.S. anti-money-laundering monitoring team to 250 from 75 in 2010 to help battle illicit money transfers, Chief Legal Officer Stuart Levey said.

The bank now has 3,500 people in its global compliance team, with 1,000 of them in the U.S., Levey, who was the top U.S. official fighting terrorist funding until last year, said in a telephone interview today. The bank plans closer co-operation with governments, he said.

“We have to develop relations with government so that can sometimes help us to identify things that would be impossible to detect,” he said. At the U.S. Treasury, “we had access to better information than financial institutions,” Levey said in a phone interview today.

HSBC, which operates in more than 80 countries, will exit businesses it sees as too risky, Levey said, without giving more details. In February, a month after he was hired, the London-based lender said U.S. prosecutors are likely to take criminal or civil enforcement measures involving the bank amid a money laundering probe.

“I often would see information and I knew the financial institution had no idea and could have no idea illicit money was moving through their institution,” Levey said of his time at the U.S. Treasury. Levey, 48, is working with Richard Bennett, the bank’s general counsel, who will retire at the end of this year after more than 33 years at the lender.

Ethical Behaviour

HSBC North America Holdings Inc. and a subsidiary, HSBC Bank USA, reached agreements in 2010 with the Office of the Comptroller of the Currency and the Federal Reserve Board to make changes to comply with the Bank Secrecy Act, a U.S. law that combats money laundering.

The bank has been sent subpoenas and other requests for information by U.S. agencies including the Department of Justice and Senate Permanent Subcommittee on Investigations relating to the Bank Secrecy Act, HSBC said in a filing on Feb. 27.

Chief Executive Officer Stuart Gulliver said last year that the bank would make its structure less complicated and bureaucratic in a way that “results in ethical behavior.”

Levey, who reports to Gulliver, said that to help meet HSBC’s goals, the bank has harmonized its rules with those nations with the highest standards, usually the U.S.

‘Stamina’ Needed

“Having the highest global standards means we have to adjust our controls to the risks of any business we are engaged in,” he said. “If we feel the business is too risky, then we would absolutely exit the business.”

Levey resigned as undersecretary for terrorism and financial intelligence a year ago. He oversaw efforts to stop illicit funding and enforce economic and trade sanctions. During a tenure that spanned the Bush and Obama administrations, Levey helped lead the American effort to staunch the flow of money intended to help al-Qaeda and regimes in Iran and North Korea.

Setting targets for success is difficult, Levey said, as criminals invent new ways to try to foil a bank’s money-laundering controls.

“I view this thing as an endless journey,” he said. “I stayed in my last job for seven years and learned there’s endless ingenuity among illicit actors. You need the same stamina.”

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