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HSBC avoided US money laundering charges 'because of market risk' HSBC avoided US money laundering charges 'because of market risk'
(about 2 hours later)
US officials refused to prosecute HSBC for money laundering in 2012 because of concerns it would cause a "global financial disaster".US officials refused to prosecute HSBC for money laundering in 2012 because of concerns it would cause a "global financial disaster".
A US Congressional report released Monday also accused former Attorney General Eric Holder of misleading congress about the decision.A US Congressional report released Monday also accused former Attorney General Eric Holder of misleading congress about the decision.
In 2012 HSBC was accused of violating US sanctions and allowing drug cartels to use its branches to launder funds.In 2012 HSBC was accused of violating US sanctions and allowing drug cartels to use its branches to launder funds.
The bank paid a $1.92bn settlement but did not face criminal charges.The bank paid a $1.92bn settlement but did not face criminal charges.
No top officials at HSBC were charged with any crimes.No top officials at HSBC were charged with any crimes.
The Justice Department spokesman, Peter Carr, said a series of factors are considered when deciding how to resolve a case, including whether there may be "adverse consequences for innocent third parties, such as employees, customers, investors, pension holders and the public".
The report says Mr Holder ignored the recommendations of more junior staff to prosecute HSBC because of the bank's "systemic importance" to the financial markets.The report says Mr Holder ignored the recommendations of more junior staff to prosecute HSBC because of the bank's "systemic importance" to the financial markets.
'Disaster''Disaster'
"Rather than lacking adequate evidence to prove HSBC's criminal conduct, internal Treasury documents show that DOJ [Department of Justice] leadership declined to pursue [the] recommendation to prosecute HSBC because senior DOJ leaders were concerned that prosecuting the bank 'could result in a global financial disaster'," the report said."Rather than lacking adequate evidence to prove HSBC's criminal conduct, internal Treasury documents show that DOJ [Department of Justice] leadership declined to pursue [the] recommendation to prosecute HSBC because senior DOJ leaders were concerned that prosecuting the bank 'could result in a global financial disaster'," the report said.
Instead, the Department of Justice and HSBC reached a $1.92bn (£1.48bn) settlement, which some politicians criticised for being too lenient.Instead, the Department of Justice and HSBC reached a $1.92bn (£1.48bn) settlement, which some politicians criticised for being too lenient.
Testifying before Congress in 2013 Mr Holder said the size of some financial institutions can make it difficult to bring criminal charges.Testifying before Congress in 2013 Mr Holder said the size of some financial institutions can make it difficult to bring criminal charges.
He later tried to clarify those remarks telling congress, "If we find a bank or a financial institution that has done something wrong, if we can prove it beyond a reasonable doubt, those cases will be brought."He later tried to clarify those remarks telling congress, "If we find a bank or a financial institution that has done something wrong, if we can prove it beyond a reasonable doubt, those cases will be brought."
Congress' report deemed these comments to be misleading in light of emails from Treasury Department staff that recommended criminal charges.Congress' report deemed these comments to be misleading in light of emails from Treasury Department staff that recommended criminal charges.
Drug cartels British influence
UK regulators also conveyed concerns to the Treasury Department that successfully prosecuting HSBC could lead to market turmoil.UK regulators also conveyed concerns to the Treasury Department that successfully prosecuting HSBC could lead to market turmoil.
The report alleges UK regulators "hampered" the investigation and "influenced" the outcome.
It says: "George Osborne, Chancellor of the Exchequer, the UK's chief financial minister, intervened in the HSBC matter by sending a letter to Federal Reserve Chairman Ben Bernanke... to express the UK's concerns regarding US enforcement actions against British banks."
The letter said that prosecuting HSBC could have "very serious implications for financial and economic stability, particularly in Europe and Asia".
Drug cartels
The 2012 settlement with HSBC detailed how the bank violated US sanctions by conducting business for customers in Iran, Libya, Sudan, Burma and Cuba.The 2012 settlement with HSBC detailed how the bank violated US sanctions by conducting business for customers in Iran, Libya, Sudan, Burma and Cuba.
HSBC accounts were also used by the Sinaloa drug cartel in Mexico and Norte del Valle cartel in Colombia to launder $881m.HSBC accounts were also used by the Sinaloa drug cartel in Mexico and Norte del Valle cartel in Colombia to launder $881m.
The settlement allowed the bank to avoid pleading guilty to any wrongdoing and no officials from the bank were even charged.The settlement allowed the bank to avoid pleading guilty to any wrongdoing and no officials from the bank were even charged.
If HSBC had been proven guilty of criminal action it could have lost its banking charter in the US.If HSBC had been proven guilty of criminal action it could have lost its banking charter in the US.
HSBC and US regulators declined to comment on the report.HSBC and US regulators declined to comment on the report.