HSBC apologizes for lapses
Source: Agencies |
July 31, 2012, Tuesday
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Print Edition
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HSBC Plc apologized to shareholders yesterday as it disclosed a US$700 million charge to cover the cost of US penalties for lapses including its failure to enforce money-laundering controls in Mexico.
The provision was announced as Europe's biggest bank reported an 11 percent advance in pretax profit in the first half of the year following US$4.3 billion in gains from asset sales. For the six months ending on June 30, the bank made a pretax profit of US$12.7 billion, up from US$11.5 billion a year earlier.
As well as costs relating to infractions in Mexico, the US$700 million provision also takes in possible penalties for violations of the US Bank Secrecy Act in a case going back two years, and any penalties from continuing investigations of possible violations of economic sanctions against Iran and other countries.
Earlier this month, HSBC paid a fine of US$28 million to Mexican authorities for non-compliance with money laundering controls.
A US Senate investigative committee reported that in 2007 and 2008 HSBC Mexico sent to the United States about US$7 billion in cash. "Bulk cash shipments could reach that volume only if they included illegal drug proceeds," the committee concluded.
HSBC Mexico acknowledged in a statement that it failed to report 39 suspicious transactions and had been late in reporting 1,729 others.
The bank's Chairman Douglas Flint and Chief Executive Stuart Gulliver apologized for the money-laundering infractions.
"We must demonstrate that we have learned from earlier mistakes," Flint said.
Gulliver said new processes and standards were being enforced in all of the bank's global operations.
The provision was announced as Europe's biggest bank reported an 11 percent advance in pretax profit in the first half of the year following US$4.3 billion in gains from asset sales. For the six months ending on June 30, the bank made a pretax profit of US$12.7 billion, up from US$11.5 billion a year earlier.
As well as costs relating to infractions in Mexico, the US$700 million provision also takes in possible penalties for violations of the US Bank Secrecy Act in a case going back two years, and any penalties from continuing investigations of possible violations of economic sanctions against Iran and other countries.
Earlier this month, HSBC paid a fine of US$28 million to Mexican authorities for non-compliance with money laundering controls.
A US Senate investigative committee reported that in 2007 and 2008 HSBC Mexico sent to the United States about US$7 billion in cash. "Bulk cash shipments could reach that volume only if they included illegal drug proceeds," the committee concluded.
HSBC Mexico acknowledged in a statement that it failed to report 39 suspicious transactions and had been late in reporting 1,729 others.
The bank's Chairman Douglas Flint and Chief Executive Stuart Gulliver apologized for the money-laundering infractions.
"We must demonstrate that we have learned from earlier mistakes," Flint said.
Gulliver said new processes and standards were being enforced in all of the bank's global operations.
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