HSBC set to pay record fine in money-laundering case

Federal and state authorities plan to announce a record $1.9 billion settlement with HSBC on Tuesday, a major victory in the government’s broad crackdown on money laundering at banks.

The settlement stems from accusations the British banking giant transferred billions of dollars on behalf of Iran and other nations hit with sanctions, and enabled Mexican drug cartels to launder money through the U.S. financial system, according to officials briefed on the matter.

The deal, which will force the bank to forfeit more than $1.2 billion and pay additional penalties, is the largest to emerge from an investigation that has spanned several years and involved multiple government agencies.

The settlement Tuesday is expected to include a deal with the Manhattan District Attorney’s Office and a deferred-prosecution agreement with the Justice Department, according to the officials. The Treasury Department is also expected to join the settlement.

Since January 2009, the Justice and Treasury departments and Manhattan prosecutors have charged six foreign banks, including Credit Suisse and Barclays.

In June, ING Bank reached a $619 million settlement to resolve claims it had transferred billions of dollars in the United States for Cuba and Iran.

On Monday, federal and state authorities announced a $327 million settlement with Standard Chartered.

The British bank, which in August agreed to a larger settlement with New York’s top banking regulator, admitted to processing thousands of transactions for Iranian and Sudanese clients through its U.S. subsidiaries.

To avoid having Iranian transactions detected by Treasury Department computer filters, Standard Chartered deliberately removed names and other identifying information, according to the authorities.

“You can’t do it; it’s against the law and today Standard Chartered is being held to account,” Lanny A. Breuer, head of the Justice Department’s criminal division, said in an interview.

The settlement with HSBC will help the bank put to rest a wide-ranging federal investigation that has loomed for years.

HSBC stood out, even among the scores of other foreign banks accused of flouting U.S. sanctions to transfer billions of dollars on behalf of rogue nations, according to several law-enforcement officials with knowledge of the investigation.

Prosecutors found the bank had facilitated money laundering by Mexican drug cartels and had moved tainted money for Saudi Arabian banks tied to terrorist organizations.

In July, HSBC was thrust into the spotlight after the Senate Permanent Subcommittee on Investigations said that between 2001 and 2010, the bank “exposed the U.S. financial system to money laundering and terrorist financing risks.”

A spokesman for the bank, Rob Sherman, said, “We are cooperating with authorities in ongoing investigations.”

By BEN PROTESS JESSICA SILVER-GREENBERG The New York Times

By BEN PROTESS JESSICA SILVER-GREENBERG
The New York Times