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Mexico slams HSBC with hefty fine of $27.5 million
By Catholic Online (NEWS CONSORTIUM)
July 26th, 2012
Catholic Online (www.catholic.org)
July 26th, 2012
Catholic Online (www.catholic.org)
Mexico's National Banking and Securities Commission, or CNBV has fined
HSBC, Europe's largest bank $27.5 million for dereliction of service in
its anti-money laundering systems. The fine came after a deeply critical
U.S. Senate report denounced the bank for letting clients shift funds
from dangerous and secretive countries.
The Mexican fine is separate from any settlement the bank might reach with the U.S. Department of Justice. Analysts estimate that could run to as much as $1 billions based on a record $619 million fine that ING bank agreed in June to pay to settle similar claims.
A U.S. Senate panel alleged that HSBC acted as a financier to clients routing funds from the world's most dangerous places. Mexico, Iran and Syria are the nations listed as doing regular business in areas tied to drug cartels, terrorist funding and tax cheats.
The report also denounced a "pervasively polluted" culture at the bank and said between 2007 and 2008, HSBC's Mexican operations moved $7 billion into the bank's U.S. operations. According to the report, HSBC ignored risks in doing business in countries like Mexico, where drug trafficking is rife.
"HSBC Mexico apologizes for its failure strictly to comply with banking regulations, and acknowledges that in the past, it has sometimes failed to meet the standards that regulators and customers expect," the bank said in a statement.
The bank said it had taken action to address the failures and noted that Mexico remained a priority market.
HSBC is one of Mexico's top five banks, with more than 1,400 branches and 6 million customers and has operated there since the 1970s. HSBC bulked up in 2000 after buying Republic National Bank and did so again in 2002 with a controlling stake in Grupo Financiero Bital.
The Senate probe has revealed just how sweeping the problems have been with the bank that many have feared.
The fine comes at the worst possible time for Britain's banks, after rival Barclays was fined $453 million by U.S. and U.K. regulators for manipulating interest rates last month.
U.S. Treasury Secretary Timothy Geithner deflected criticism of his handling of the Libor banking scandal this week, directing U.S. lawmakers' scorn toward London regulators.
"I believe we did the necessary appropriate things," Geithner said, who was at the time the president of the New York branch of the Federal Reserve.
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