Page 145 - Bank Case Studies

Failure after failure at HSBC led to the bank being used as a

conduit for "drug kingpins and rogue nations", a 300-page

report compiled for a US Senate committee and had found.

It was a bank, US prosecutors said, was guilty of 'blatant
failure' to implement anti-money laundering controls and

wilfully flouting U.S. sanctions.

Assistant attorney general, Lanny Breuer, told a press
conference in New York that Mexican drug traffickers

deposited hundreds of thousands of dollars each day in

HSBC accounts. At least $881m in drug trafficking money

was laundered throughout the bank's accounts and

facilitated hundreds of millions more in transactions with

sanctioned countries." (1, 3)

The penalty included a deferred

prosecution agreement with the

DOJ of five years under which the

bank would install an

independent monitor to assess

reformed internal controls.

Moreover, the bank's top

executives were to defer part of their bonuses for the whole

of the five-year period, while bonuses have been clawed

back from a number of former and current executives,
including those in the US directly involved at the time.

“Gulliver stressed that the bank had co-operated

with the US authorities. "Over the last two years,

under new senior leadership, we have been taking

concrete steps to put right what went wrong and