March 29, 2016
The monitor overseeing HSBC’s compliance with a landmark anti-money-laundering settlement has uncovered a range of potential lapses including loans to companies that exported miniskirts to Iran and candy to Syria, and the opening of an account by a man in Mexico who had thousands of dollars of cash in a bag, according to a person familiar with the monitor’s findings.
In 2012, HSBC Holdings PLC agreed to pay a then-record $1.9 billion to the U.S. Justice Department to settle allegations it failed to spot the laundered proceeds of drug trafficking in Mexico and failed to flag transactions with countries subject to economic sanctions, such as Iran. The monitor’s findings, which date from 2015, suggest that despite three years of efforts to bring compliance systems up to U.S. standards, HSBC still is struggling to meet the terms of the deal.
The monitor’s investigators also found an HSBC client exporting Levi’s miniskirts from Brazil to Iran, a country that was under full U.S. sanctions at the time, not to mention banning such clothing in public. While the exports were a fraction of the bank customer’s business, HSBC should have flagged this trade for additional scrutiny but didn’t, the inspectors believed.
Another HSBC client exported candy from Brazil to Syria, also on the U.S. sanctions list. The inspectors thought this, too, should have been flagged.