International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Wednesday, April 1, 2015

Is HSBC Complying With its Non Prosecution Agreement? Outside Monitor Reports ...

Is HSBC Complying With its Non Prosecution Agreement?  There is much reference within news articles to the 1,000 page report of the outside monitor, former New York prosecutor Michael Cherkasky, and summary letter by Justice.  Yet, after an hour of Google searching, I cannot find the report or letter publicly available to read it myself.  Instead, I include three links below to examples news reports about the actual 1,000 page report.   

Bloomberg reports that HSBC, fined $1.9 Billion in 2012 upon entering into an non-prosecution Justice logoagreement "is falling short on its agreement with the U.S. to clean up operations after clients laundered drug money and did business with terrorist regimes, according to two people familiar with a report from the bank’s monitor [Michael Cherkasky].  The critical, 1,000-page report, which summarizes HSBC’s first year under a court-appointed monitor, raises doubts about how effective the government’s use of deferred- and non-prosecution agreements is in reining in wrongdoing and changing culture at the world’s largest banks."

Reuters reported that "HSBC has made some progress in improving its anti-money laundering program as required by a 2012 deferred prosecution agreement with the U.S. Justice Department, but there remains "much work to be done," federal prosecutors said in a Tuesday court filing."

WSJ provides a different spin, reporting that "... the compliance monitor, Michael G. Cherkasky, said he believes that the bank is "appropriately committed" to bolstering its anti-money-laundering defenses and had made significant progress doing so ... But Mr. Cherkasky warned that the systems the bank uses to monitor its customers' transactions were different across the company and needed to be improved."

DOJ NPA Documents "Failure to provide adequate staffing and other resources to maintain an effective AML program."

Congressional Report 2012 "Global banking giant HSBC and its U.S. affiliate exposed the U.S. financial system to a wide array of money laundering, drug trafficking, and terrorist financing risks due to poor anti-money laundering (AML) controls, a Senate Permanent Subcommittee on Investigations probe has found."

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