Bank in discussions to settle money laundering probes

HSBC, which is under investigation by US regulators for laundering funds of sanctioned nations including Iran and Sudan, is in talks to settle the matter, two people with knowledge of the case have said.

The bank, Europe’s largest by market value, made a $700m (€560m) provision in July for any US fines after a senate committee found it had given terrorists and drug cartels access to the US financial system. That sum might increase, chief executive Stuart Gulliver has said.

A HSBC settlement that regulators and the Manhattan district attorney were aiming to conclude as early as September may have been slowed when New York’s banking superintendent accused Standard Chartered of laundering $250bn for Iran.

Regulators had been talking with both banks about universal accords when Benjamin Lawsky on Aug 6 threatened to revoke Standard Chartered’s licence.

Deals with the London-based banks next month are still possible, the sources said.

“This is an epidemic of banks willfully, consistently violating economic sanctions,” said Jimmy Gurule, a former undersecretary for enforcement at the US treasury, said of sanctioned-nation money laundering. “It calls for more serious sanctions than a monetary fine for an individual bank that does nothing more than harm shareholders.”

HSBC’s $700m set-aside, if paid, would constitute the largest US settlement reached over such allegations. Standard Chartered has agreed to pay $340m to settle the New York state matter, an accord that broke a previous pattern of resolving all such US probes in a unified agreement.

HSBC’s credit-rating outlook was cut last week by Standard & Poor’s, which questioned whether the lender is too big to be managed effectively in the wake of money-laundering investigations. S&P reduced its outlook on HSBC’s long-term rating to negative from stable.

Bloomberg