US Fed ends decade-long enforcement action against HSBC

Brendan McDermid

The US Federal Reserve has terminated a decade-long enforcement action against HSBC Holdings PLC for violation of anti-money laundering rules and sanction laws.

The enforcement order ended on Aug. 26, the Fed said in a statement on Thursday.

HSBC did not immediately respond to Reuters’ request for comment.

Terminating enforcement action against banks is not uncommon at the Fed as these usually involve banks paying fines and ensuring they abide by additional requirements laid out by the regulator.

In 2012, London-headquartered HSBC was accused of having degenerated into a “preferred financial institution” for Mexican and Colombian drug cartels, money launderers and other wrongdoers through what the US Department of Justice (DoJ) called “stunning failures of oversight.”

HSBC later acknowledged it failed to maintain an effective program against money laundering and failed to conduct basic due diligence on some of its account holders and agreed to pay a then-record $1.92 billion in fines to US authorities.

The bank entered into a five year deal in 2012 under which it pledged to strengthen its sanctions and anti-money laundering controls.

In 2017, HSBC said it had successfully kept the deal conditions and that the DoJ would therefore file a motion to dismiss the charges that had been deferred by the agreement.

Some of the world’s biggest banks have been hit with massive fines for failing to catch unlawful proceeds moving through their systems and many have made significant investment to improve compliance.

In 2020, Goldman Sachs Group Inc agreed to pay $2.9 billion over its role in a corruption scandal involving Malaysia’s 1MDB after reaching a settlement with the DoJ and other US and overseas regulators.