Briefing: HSBC, money laundering and Lord Green

What’s HSBC done wrong?

Put simply, HSBC was not rigorous enough in preventing money laundering through its banks. Last week, the United States Senate’s Permanent Subcommittee on Investigations released a damning report finding that HSBC had ‘exposed the US financial system to a wide array of money laundering, drug trafficking, and terrorist financing risks due to poor anti-money laundering controls’.

In particular, the committee criticised the way HSBC treated its Mexican arm. HSBC Mexico, the report says ‘operated in Mexico, a country under siege from drug crime, violence and money laundering; it had high risk clients, such as Mexican casas de cambios [bureaux de change] and US money service businesses; and it offered high risk products, such as US dollar accounts in the Cayman Islands’. HSBC should have treated it as ‘a high risk correspondent client subject to enhanced due diligence and monitoring’. Instead, from 2002 to 2009, HSBC US gave Mexico its lowest rating for risk of money laundering.