In a sprawling, low-rise building abutting pasture land in New Castle, Delaware, HSBC’s anti-money laundering staff review customer transactions and so-called alerts generated when the bank’s monitoring systems spot a suspicious transaction. It also housed the “look-back” at thousands of old transactions that the U.S. Comptroller of the Currency ordered in 2010, after citing the bank for multiple anti-money laundering failures.
Former employees in the New Castle office describe a febrile boiler-room environment overseen by managers uninterested in investigating transactions with possible links to drug trafficking, terrorist financing, Iran and other countries under U.S. sanctions, and other illegal activities. Instead, they say, the single-minded focus was on clearing out the paperwork as fast as possible…
‘JUST A FACTORY’
Several of these contractors, echoing Stern, said the effort was more cosmetic than concrete. One said that when an investigator couldn’t track down information on a counterparty to a particular transaction, the investigator was told to close the case even if it seemed suspect.
“I was extremely, extremely disappointed with the ethical part of how they were handling it,” said one former task force contractor. “It was just a factory the way it was handled. There was a lot of pressure to get investigations closed.”…
THE LOOK-BACK
On May 3, Reuters reported that U.S. Attorney offices in West Virginia and New York had been investigating the bank, and that the West Virginia probe had found widespread anti-money laundering problems, including a backlog of nearly 50,000 alerts of suspicious transactions.
In confidential documents reviewed by Reuters, a report on the investigations excoriated HSBC’s anti-money laundering program for its “gullible, poorly trained, and otherwise incompetent personnel who were incapable of recognizing blatantly suspicious money laundering activities.”…
‘RIGOROUS AND THOROUGH’
Saskia Rietbroek, an anti-money laundering consultant at AML Services International in Miami who was not involved in the New Castle operation, said the regulatory framework for look-backs can give banks an incentive to shirk.
“The bank is ordered to find suspicious transactions that should have been reported. The more unreported transactions they find, the higher the fine,” she said. “So, do you think they will dig and dig until they find everything? It is more likely going to be a cursory review. It is a conflict of interest.”
Detailed link to the Reuters report: click here(©Reuters)
HSBC’s dirty laundry (detailed report in pdf): click here