U.S. government accuse HSBC of 'turning a blind eye' to billion dollar drug money laundering as they force bank to pay record £1.2bn settlement

  • HSBC accused of ignoring money laundering by Mexican drug cartels 
  • British bank also breached sanctions against regimes such as Iran and Libya
  • Calls for ex-CEO, Trade Minister Lord Green, to explain 'what he knew'
  • The bank has been forced by U.S. Government to pay a £1.2 billion settlement of the money laundering

By James Salmon for the Daily Mail and Daniel Bates

Published: | Updated:


Britain's biggest bank has been attacked by US authorities for 'turning a blind eye' to large-scale money laundering by drug cartels, terrorists and rogue regimes.

The US Department of Justice yesterday accused HSBC of an 'astonishing record of dysfunction' in allowing hundreds of millions of illicit dollars through its branches.

The bank is said to have had such a 'ringing endorsement' from Mexico drug gangs that it became known as the 'place to launder money'.

Dirty money: HSBC's headquarters in Mexico City, where the bank is said to have become known as 'the place to go' for money laundering among Mexico's drug cartels

Dirty money: HSBC's headquarters in Mexico City, where the bank is said to have become known as 'the place to go' for money laundering among Mexico's drug cartels

The revelations put renewed pressure on trade minister Lord Green for his former role as boss of HSBC. The Tory peer was chief executive of the bank from 2003 to 2006 – and US authorities say the worst wrongdoing took place between 2002 and 2010.

The blistering attack in the US was launched as HSBC was forced to pay a record £1.2billion settlement for money-laundering activities and breaching sanctions against regimes including Cuba, Iran, Libya, Burma and Zimbabwe.

In a further humiliation HSBC agreed to spend £430million on a 26 point 'know your customer' plan to ensure it doesn't do business with terrorists or drug gangs in future.

HSBC chief executive Stuart Gulliver said the bank is 'profoundly sorry' for the failings.

Yesterday, Lord Green, who left the bank with a £19.1million pension pot, was urged by Labour's Chris Leslie to clear up 'lingering' doubts about his failure to stop the scandal.

Apologetic: HSBC chief executive officer Stuart Gulliver said the bank was 'profoundly sorry' for any part they may have played in money laundering

Apologetic: HSBC chief executive officer Stuart Gulliver said the bank was 'profoundly sorry' for any part they may have played in money laundering

Dysfunctional bank: Lanny Breuer, Assistant Attorney General of the U.S. Department of Justice accused HSBC of 'turning a blind eye' and allowing billions of pounds to be laundered through their U.S arm

Dysfunctional bank: Lanny Breuer, Assistant Attorney General of the U.S. Department of Justice accused HSBC of 'turning a blind eye' and allowing billions of pounds to be laundered through their U.S arm

The shadow Treasury minister said Lord Green should reveal 'what he knew and when'.

An email published in a probe by the US Senate suggested Lord Green was warned about wrongdoing as far back as January 2005 by the bank's former compliance chief, David Bagley.

Lord Green, 64, has previously claimed 'he has no case to answer' but refused to comment yesterday.

Lanny Breuer, assistant attorney general of the US Department of Justice's criminal division said: 'HSBC is being held accountable for stunning failures of oversight – and worse. The record of dysfunction that prevailed at HSBC for many years was astonishing.'

Mr Breuer said one transaction with Iran involved 32,000 ounces of gold that went directly to the Iranian Central Bank.

Under fire: Trade Minister Lord Green previously claimed he had no 'case to answer' regarding money laundering taking place during his time as head of HSBC but emails suggest he was warned as early as 2005

Under fire: Trade Minister Lord Green previously claimed he had no 'case to answer' regarding money laundering taking place during his time as head of HSBC but emails suggest he was warned as early as 2005

In a further damning detail, he revealed that Mexican drug gangs used the bank so often they built special boxes to fit into the HSBC teller's slots.

He added that the bank was not being stripped of its licence to trade in the US because it would mean 'innocent' people in America would lose jobs.

The Department of Justice said at least £550million in proceeds from drugs trafficking from Mexican and drug cartels was laundered through HSBC in the US.

Cashwash: The posters on the right show how money has been laundered from Mexico through HSBC

Cashwash: The posters on the right show how money has been laundered from Mexico through HSBC

It also accused the bank of helping countries evade sanctions, with £410million from Sudan, Libya and others sent to HSBC accounts in the US.

Loretta Lynch, US Attorney for the Eastern District of New York said that the 'woefully inadequate' compliance systems meant that HSBC became known as 'the place to launder money'.

The client list included Sinaloa, Mexico's most powerful gang, which has been behind over 20,000 killings since 2006. Murders by the cartel often involve beheadings. Some are filmed and put on the internet to warn rivals.

The extent of the scandal emerged in July when senior HSBC executives were hauled before a powerful Senate committee. The bank has been braced for a fine ever since, putting aside £930million to cover a settlement.

A UK Government spokesman said: 'At the time of the report's publication HSBC expressed its regret that there were failures of implementation and Lord Green has said that he shares that regret.'

HSBC said it increased spending on US anti-money laundering ninefold to £150 million between 2009 and 2011.

HSBC

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