Federal regulators order HSBC’s US operations to improve compliance with money-laundering laws

Thursday, October 7, 2010

Feds order HSBC to boost money-laundering controls

NEW YORK — Federal regulators on Thursday said HSBC North America Holdings Inc. has been ordered to improve its compliance with money laundering laws.

A federal investigation found the U.S. subsidiaries of the London-based HSBC Holdings PLC do not have tight enough controls over a list of money transfer operations.

“The bank’s compliance program and its implementation are ineffective, and accompanied by aggravating factors, such as highly suspicious activity creating a significant potential for unreported money laundering or terrorist financing,” the Office of the Comptroller of the Currency said in a consent order entered into by HSBC.

HSBC signed consent orders with the Office of the Comptroller of the Currency and Federal Reserve that lay out strict timetables fixing the problems identified, and bring itself into compliance with the Bank Secrecy Act and other anti-money laundering measures. That includes requirements to hire individuals to fill certain jobs in as little as 10 days.

The bank says it has taken action on some of the issues, and will be exiting areas it does not consider part of its core business.

Among the problems uncovered were inadequate monitoring of wire transfers from certain countries considered “standard” or “medium” risk; inadequate monitoring of bulk cash transactions; delayed reporting of suspicious activity and a failure to appropriately designate certain customers as “high-risk.”

The investigation found the problems reflected staffing issues, sub-par procedures and ineffective collection and analysis of certain information.

HSBC’s U.S.-traded shares dipped 12 cents to $52.55.

(This version CORRECTS name to Comptroller of the Currency in third and fourth paragraphs)

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