18.07.2012
By Simon Miller
HSBC's head of compliance David Bagley has resigned following the bank being found to have facilitated a global money laundering operation.
After a year-long investigation into money laundering, HSBC was found to have lax controls and inadequate compliance by staff at HSBC’s 470 branches in the US.
The investigation alleged that the bank ignored specific US measures that are meant to prevent transactions involving terrorists, drug lords and rogue regimes. For instance two HSBC subsidiaries processed 25,0000 transactions over seven years without disclosing the cash had links to Iran.
The bank also ignored warnings from US and Mexican authorities that billions of dollars that it moved from Mexican subsidiary HMBX to its US network could only have been connected to drug trafficking.
At the Senate hearing, HSBC was accused of being “pervasively polluted for a long time” for allowing funds to be shifted to and from its US branches from Mexico, Syria, the Cayman Islands and Saudi Arabia.
In a statement before the hearing, HSBC said it had learned a great deal working with the Subcommittee on this case history and also working with US regulatory authorities, and “recognise that our controls could and should have been stronger and more effective in order to spot and deal with unacceptable behaviour”.
HSBC chief executive Stuart Gulliver echoed the statement when he apologised at the committee: “We have sometimes failed to meet the standards regulators and customer expect. We take responsibility for fixing what went wrong.”
Bagley told the committee that he was standing down as global head of compliance for 20 years although he would be staying with the bank.
"As I have thought about the structural transformation of the bank's compliance function, I recommended to the group that now is the appropriate time for me and for the bank for someone new to serve as the head of group compliance. I have agreed to work with the bank's senior management towards an orderly transition of this important role," he commented.
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