The Federal Reserve has terminated a 2012 enforcement action with HSBC Holdings in which the London-based bank had admitted that it willfully violated its anti-money-laundering obligations.
The Fed's action marks a key milestone in a long-running saga that has sullied the global bank's reputation.
HSBC's lax controls enabled drug cartels to move hundreds of millions of dollars through the bank's Mexican banking subsidiary and into the United States, and they also allowed money to be moved through the U.S. financial system by banks in Cuba, Iran, Libya and other sanctioned nations.
The Fed said in a press release Thursday that it lifted the cease-and-desist order on Aug. 26, but it did not provide further comment.
An HSBC spokesperson said the company is pleased with the Fed's decision to terminate the order and remains committed to combating financial crime. "Over the last decade HSBC's employees have worked hard to transform the bank's financial crime risk management capabilities," the company said in a statement.
The Fed's order was part of a barrage of U.S. government actions against the bank in December 2012. At the time, HSBC entered into a deferred prosecution agreement with the Department of Justice and agreed to pay a total of $1.92 billion in fines to U.S. authorities, including a $1.26 billion forfeiture to the Justice Department.
The bank also agreed to pay $500 million to the Office of the Comptroller of the Currency and $165 million to the Fed. A cease-and-desist order that HSBC reached with the OCC was terminated in June 2018.
Back in 2012, the Justice Department
At least $881 million in proceeds from drug trafficking, including from cartels based in Mexico and Colombia, were laundered through HSBC Bank USA, according to prosecutors.
Investigations subcommittee will focus on global bank in effort to illustrate money-laundering problems at institutions with large correspondent banking platforms.
Just two years earlier, HSBC had entered into cease-and-desist orders with both the Fed and the OCC in connection with its anti-money-laundering efforts.
When the penalties came down in 2012, then-CEO Stuart Gulliver said that HSBC had changed fundamentally over the previous two years. "We accept responsibility for our past mistakes," he
The Fed's 2012 order required HSBC to develop a compliance program that covered both anti-money-laundering efforts and U.S. sanctions.
More recently, HSBC has scaled back its U.S. operations, selling 90 of its 148 branches in this country. In a deal that closed in February, HSBC sold 80 East Coast branches and its national online deposit business to Citizens Financial Group. And it sold 10 West Coast branches to Cathay Bank.
