HSBC Money Laundering Report Release Put on Hold Zacks
go to original March 14, 2016

The release of a January 2015 report that outlined London-based HSBC Holdings’ irregular efforts to comply with anti-money laundering requirements has been delayed by U.S. judge – John Gleeson. The report says HSBC "moved too slowly" in improving its anti-money laundering compliance program, which followed the bank’s $1.9 billion agreement with the U.S. Justice Department.

Though the U.S. District Judge in Brooklyn, NY delayed the release of the report, HSBC and prosecutors appealed the January ruling, which sought to open the report by Michael Cherkasky – the federal monitor appointed in the five-year deferred prosecution deal in 2012.

Gleeson also allowed former New York prosecutor Michael Cherkasky to edit parts of the January 2015 report so that risks could be minimized. However, most revisions suggested were discarded by Gleeson stating that these were "over-inclusive."

Among the findings that HSBC wanted to be edited, Gleeson said, include Cherkasky's conclusion that the bank "moved too slowly and made too little progress toward instilling the type of culture it will need" to build an effective compliance program.

The suit filed in a federal court in Texas recounted the money laundering charges on HSBC, for which the bank had settled nearly $2 billion in penalties in December 2012. The bank has been under the regulatory radar for its failure to prevent hundreds of millions of dollars in drug money flowing through the bank from Mexico.

The investigation had revealed substantial lapses in the bank's anti-money laundering compliance, which resulted in worldwide displacement of funds from riskier nations through the bank. Controversial transactions pertaining to its Iranian clientele and the illegal narcotics trade in Mexico had drawn maximum attention.

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