London: Global banking major HSBC will pay a whopping USD 1.92 billion to US authorities for settling alleged violations of money laundering, terror-financing and sanction laws. (Agencies)
The settlement announced by HSBC brings an end to probe initiated by US authorities following US Senate allegations that the London-headquartered bank had exposed the American financial system to various terror-financing, money laundering and drug trafficking activities.
Admitting responsibility for "past mistakes", HSBC said it has reached an agreement with US authorities in relation to investigations into inadequate compliance with anti-money laundering and sanctions laws.
A Deferred Prosecution Agreement (DPA) also has been reached with the US Department of Justice, among others.
"Under these agreements, HSBC will make payments totaling USD 1.921 billion, continue to cooperate fully with regulatory and law enforcement authorities." the bank said in a statement.
As per the US Senate report in July, HSBC indulged in transactions worth billions of dollars -- that exposed US financial system to risks - mainly due to poor risk control systems at the bank.
HSBC has also reached agreement to achieve a global resolution with all other US government agencies that have investigated its past conduct related to these issues.
The banking entity said it expects to finalise an undertaking with the UK Financial Services Authority shortly.
"We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again," HSBC Group Chief Executive Stuart Gulliver said.
The announcement comes a day after US Treasury said StanChart would pay USD 132 million to settle alleged violations of sanctions laws, including those relating to Iran, Burma, Libya and Sudan. The amount is part of USD 327 million settlements with US authorities.
Explaining various measures put in place, Gulliver emphasised that "HSBC of today is a fundamentally different organisation from the one that made those mistakes".
After the July report, HSBC had apologised for the shortfalls and also saw the exit of a senior executive.
The US Senate in an extensive report had said that HSBC's Mexican affiliate "transported USD 7 billion in physical US dollars to HSBC-US from 2007 to 2008, outstripping other Mexican banks, even one twice its size, raising red flags that the volume of dollars included proceeds from illegal drug sales in the US".
According to HSBC, many steps have been initiated to strengthen its controls and procedures.
Among others, the bank said it has "commenced a review of all Know Your Customer files across the entire group – the first phase of this remediation will cost an estimated USD 700 million over five years".
Over the five-year term of the agreement with the Department of Justice, an independent monitor would evaluate HSBC's progress in fully implementing these and other measures it recommends and would produce regular assessments of the effectiveness of HSBC's compliance function.
London: Global banking major HSBC will pay a whopping USD 1.92 billion to US authorities for settling alleged violations of money laundering, terror-financing and sanction laws.