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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. |
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. |