HSBC to pay $1.9 billion to settle probe

December 11, 2012 09:44

HSBC, the British banking giant, will pay $1.9 billion to settle a money-laundering probe by federal and state authorities in the United States, a law enforcement official said on Monday.

The probe of the Europe's largest bank by market value has focussed on the transfer of billions of dollars on behalf of nations like Iran, which are under international sanctions, and the transfer of money through the US financial system from Mexican drug cartels.

According to the official, HSBC will pay $1.25 billion in forfeiture and pay $655 million in civil penalties. The $1.25 billion figure is the largest forfeiture ever in a case involving a bank.

Under what is known as a deferred prosecution agreement, the financial institution will be accused of violating the Bank Secrecy Act and the Trading with the Enemy Act.

The official spoke on condition of anonymity because the source was not authorised to speak about the matter on the record.

Under the deferred prosecution arrangement, HSBC will admit to certain misconduct, the official said, but the details of those admissions to be made in a New York court were not immediately available late Monday.

Nevertheless the deferred prosecution agreement means the bank wont be prosecuted further if it meets certain conditions, such as strengthening its internal controls to prevent money laundering. The Justice Department has used such arrangements often in cases involving large corporations, notably in settlements of foreign bribery charges.

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