In a hard-hitting report, US lawmakers accused the global bank HSBC on Monday of opening the doors of the financial system to terrorists, drug dealers and money launderers.
Senators found the London-based lender allowed affiliates in countries such as Mexico, Saudi Arabia and Bangladesh to move billions of dollars in suspect funds into the US without adequate controls.
At a time when the banking sector is already under fire for manipulating interest rates and the reckless trades that led to the 2008 financial crisis, HSBC moved quickly to apologize and promise to improve its procedures.
“In an age of international terrorism, drug violence in our streets ... and organized crime, stopping illicit money flows that support those atrocities is a national security imperative,” Senator Carl Levin said.
“HSBC used its US bank as a gateway into the US financial system for some HSBC affiliates around the world to provide US dollar services to clients while playing fast and loose with US banking rules,” his statement said.
“If an international bank won’t police its own affiliates to stop illicit money, the regulatory agencies should consider whether to revoke the charter of the US bank being used to aid and abet that illicit money,” he said.
HSBC said it was to attend a Senate hearing yesterday and swears it has created a new simpler-to-manage global structure for its operations while doubling the budget of the compliance wing charged with applying anti-laundering rules.
“We will acknowledge that, in the past, we have sometimes failed to meet the standards that regulators and customers expect,” HSBC said in a statement.
“We will apologize, acknowledge these mistakes, answer for our actions and give our absolute commitment to fixing what went wrong,” it added.
In future, all HSBC banks around the world would apply “a single standard globally determined by the highest regulatory standard we must apply anywhere.”
Under the slogan “The World’s Local Bank,” the network that began life as the Hong Kong and Shanghai Banking Corp provides US dollars to HSBC banks in many countries under a procedure known as “correspondent banking.”
According to the US Senate’s Permanent Subcommittee on Investigations, the firm’s US unit HBUS allowed partner HSBC banks in countries with weak fraud and laundering controls to move billions of dollars through its books.
“The Mexican affiliate transported US$7 billion in physical US dollars to HBUS from 2007 to 2008 ... raising red flags that the volume of dollars included proceeds from illegal drug sales in the US,” the report says.
“HBUS provided US dollars and banking services to some banks in Saudi Arabia and Bangladesh despite links to terrorist financing,” says the 330-page document, which was to be formally released yesterday.
“In less than four years, HSBC cleared US$290 million in obviously suspicious US travelers checks for a Japanese bank, benefiting Russians who claimed to be in the used car business,” it adds, according to a news release.
In a statement released ahead of yesterday’s hearing, Levin demanded that the US federal regulator, the Office of the Comptroller of the Currency, do more to keep an eye on HSBC and other banks and take action against abuses.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by