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US ends 10-year probe into HSBC as cartels' "favourite financial firm"

The US Federal Reserve has ended a 10-year enforcement case against HSBC for money laundering and sanctions violations.

Back in 2012, the bank was accused of being the "preferred financial institution" for Mexican and Colombian drug cartels, and it has since paid more than $2 billion in fines.


The bank agreed to pay a record $1.92BN in fines after the US Department of Justice (DoJ) accused it of "shocking breaches of oversight."


When HSBC failed to establish an efficient anti-money laundering programme, the bank was also compelled to comply with a business improvement order.


In a statement, the bank said: “Over the last decade HSBC’s employees have worked hard to transform the bank’s financial crime risk management capabilities.”


“We are pleased with the Federal Reserve’s decision to terminate the 2012 consent order and remain committed to our efforts to combat financial crime,” they added.


Last July, it was reported that HSBC had found a multibillion-dollar money-laundering ring, with sources questioning whether HSBC had appropriated shared information with the financial surveillance team, which was established by US authorities in 2012.


The UK's Financial Conduct Authority fined HSBC £63.9 million (€75 million) earlier this year for "poor transaction monitoring controls."


The FCA stated in a statement that the bank employed automated processes to monitor millions of transactions every month to uncover financial crime, adding that over an eight-year period, three critical aspects of these systems demonstrated "severe flaws."


HSBC did not "examine whether the scenarios used to identify signs of money laundering or terrorist financing encompassed relevant risks until 2014," and it did not conduct "time risk evaluations for new scenarios beyond 2016."


The FCA also discovered that HSBC failed to "appropriately test and update the parameters within the systems that were used to determine whether a transaction was indicative of potentially suspicious activity," as well as failing to "check the accuracy and completeness of the data being fed into, and contained within, monitoring systems."

By fLEXI tEAM

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