Washington: The US Federal Reserve has terminated a decade-long enforcement action against HSBC Holdings under which Europe’s biggest bank by assets was ordered to improve practices after violating money laundering and sanction rules.
London-headquartered HSBC was accused in 2012 of degenerating into a preferred financial institution for drug cartels.
The bank agreed to pay a then-record $1.92 billion in fines and abide by a business improvement order after acknowledging it failed to maintain an effective program against money laundering and conduct basic due diligence on some of its account holders.
“Over the last decade HSBC’s employees have worked hard to transform the bank’s financial crime risk management capabilities,” the bank said in a statement.
“We are pleased with the Federal Reserve’s decision to terminate the 2012 consent order and remain committed to our efforts to combat financial crime.” The enforcement order ended on August 26, the Fed said in a statement on Thursday.
“I do not feel it changes anything fundamentally for HSBC,” said Daniel Tabbush, an independent Asian banking analyst who publishes on Smartkarma.
“The bank must have its focus on its aggressive lending into China wholesale banking... The bank’s other focus will be the worsening outlook in its other key markets, Hong Kong and the UK”. The termination removes a potential regulatory overhang for HSBC, which has been trying to shrink its presence in some North American markets where it has struggled against competition from larger domestic players.
In May last year, the bank announced it was withdrawing from US mass market retail banking by selling some parts of its money-losing business and winding down others in a long-awaited move as the lender stepped up a shift in focus to Asia.