HSBC Holdings plc is a major international banking group headquartered in London, with historical roots in Hong Kong and Shanghai. At the time of the case below, HSBC Bank USA N.A. was its principal US subsidiary.
The case
In December 2012, the US Department of Justice filed a criminal information against HSBC Holdings plc and HSBC Bank USA over serious violations of US anti-money-laundering and sanctions law - breaches of the Bank Secrecy Act, the International Emergency Economic Powers Act, and the Trading with the Enemy Act. HSBC waived indictment, admitted the conduct laid out in the agreement, and entered a five-year Deferred Prosecution Agreement.
The hard numbers
HSBC agreed to forfeit approximately US$1.256 billion, with an additional roughly US$665 million in civil penalties — a total financial cost of about US$1.92 billion. The bank also accepted an outside compliance monitor and a sweeping overhaul of its anti-money-laundering systems.
Still operating
Despite admitting conduct serious enough to warrant a near-$2 billion penalty and a formal deferred criminal prosecution, HSBC was not closed. Its international banking operations continued without interruption, and it remains one of the world's largest banks today.
The comparison with BCCI
At the exact moment HSBC's admitted conduct was being resolved through fines, monitoring, and reform, BCCI was in the middle of an Abu Dhabi-funded restructuring meant to fix its own management weaknesses and impaired assets while preserving the operating bank. If nearly $2 billion in admitted anti-money-laundering and sanctions violations at HSBC could be addressed through a deferred prosecution and continued operation, why was a comparable path - isolating the wrongdoing, fixing the controls, keeping the bank running - never seriously tested for BCCI?
Also read:
- HSBC Holdings Plc. and HSBC Bank USA N.A. Admit to Anti-Money Laundering and Sanctions Violations, Forfeit $1.256 Billion in Deferred Prosecution Agreement
- HSBC Holdings plc and HSBC Bank USA N.A. Admit to Anti-Money Laundering and Sanctions Violations, Forfeit $1.256 Billion in Deferred Prosecution Agreement
