British bank HSBC has undermined the U.S. financial system exposing it to possible money laundering related to drug trafficking or terrorist financing, indicates a U.S. Senate report. The report of a senatorial committee investigation on internal security revealed “serious deficiencies” in the fight against money laundering, at the U.S. subsidiary of HSBC, HBUS, which fails, according to U.S. lawmakers to effectively monitor suspicious activities. HSBC could face a $1 billion fine. Suspicious funds from Syria, Cayman Islands, Iran and Saudi Arabia have also passed through the bank.
The bank exposed the U.S. financial system to possible money laundering operations originating from Mexican drug cartels. Mexican subsidiary has transferred an amount of $7 billion to HBUS between 2007 and 2008, write the authors of report. Meanwhile, HBUS had financial relationships with banking institutions suspected of links with alleged terrorist organizations. The 330-page report mentions the Saudi financial institution Al Rajhi Bank.
“In the era of international terrorism, drug-related violence on the streets and on our borders, of organized crime, to restrain the flow of money to support these horrors is a priority for national security,” wrote in a statement Senator Carl Levin, who chairs the US Senate Permanent Subcommittee on Investigations. Levin also said: “The culture at HSBC was pervasively polluted for a long time”. The report will be presented today at a hearing of the Senate committee.
HSBC had no immediate reaction, but according to an internal document quoted by Dow Jones Newswires, the banking giant plans to apologize to the American Senate committee. HBUS has 470 branches in the United States and provides services to around 1,200 other banks, according to the source.
This report comes after another scandal that rocked the financial world and involving the second largest British bank, Barclays, accused of manipulating interbank LIBOR interest rate. The scandal is also a big problem for the British government: Stephen Green, now minister for investment and trade, was head of HSBC during the period in question. He left HSBC in 2010.
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