‘HSBC cash shipments could reach that volume only if drug proceeds included’

Jul 20 2012, 10:40 IST
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SummaryExcerpts from a US senate report that found HSBC didn’t do enough to prevent money laundering

Excerpts from a US senate report that found HSBC didn’t do enough to prevent money laundering

Mexico & drugs

HBMX, an HSBC affiliate in Mexico, illustrates how providing a correspondent account and US dollar services to a high-risk affiliate increased AML [anti-money laundering] risks for HBUS [HSBC’s US affiliate].

...HBMX opened accounts for high-risk clients, including Mexican casas de cambios and US money service businesses, such as Casa de Cambio Puebla and Sigue Corporation which later legal proceedings showed had laundered funds from illegal drug sales in the United States. HMBX also offered high-risk products, including providing US dollar accounts in the Cayman Islands to nearly 50,000 clients with $2.1 billion in assets, many of which supplied no KYC information and some of which misused their accounts on behalf of a drug cartel. HBMX was the single largest exporter of US dollars to HBUS, transferring over $3 billion in 2007 and $4 billion in 2008... Mexican and US law enforcement and regulatory authorities expressed concern that HBMX’s bulk cash shipments could reach that volume only if they included illegal drug proceeds that had been brought back to Mexico from the United States.

Saudi arabia & terror

HSBC has been active in Saudi Arabia, conducting substantial banking activities through affiliates as well as doing business with Saudi Arabia’s largest private financial institution, Al Rajhi Bank. After the 9/11 terrorist attack, evidence began to emerge that Al Rajhi Bank and some of its owners had links to financing organisations associated with terrorism, including evidence that the bank’s key founder was an early financial benefactor of al-Qaeda...

Due to terrorist financing concerns, HBUS closed the correspondent banking and banknotes accounts it had provided to Al Rajhi Bank. In December 2006, however, after Al Rajhi Bank threatened to pull all of its business from HSBC unless it regained access to HBUS’s US banknotes program, HBUS agreed to resume supplying Al Rajhi Bank with shipments of US dollars. Despite ongoing troubling information, HBUS provided nearly $1 billion in US dollars to Al Rajhi Bank until 2010, when HSBC decided, on a global basis, to exit the US banknotes business.

...US government reports, criminal and civil legal proceedings, and media reports have alleged links between Al Rajhi family members and the Al Rajhi Bank to terrorist financing. [These] include that some family members were major donors to al-Qaeda or Islamic charities suspected of funding terrorism, established their own nonprofit organisations in the

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