HSBC says laundering probe could cost it over $1.5 bn
07 November 2012
British bank HSBC Holdings acknowledged on Monday that its exposure to an industry-wide money laundering investigation could cost it ''significantly'' more than the $1.5 billion it has already set aside, and that it could even face criminal charges in the United States.
HSBC said the US investigation had damaged the bank's reputation; and with its legal liabilities rising, forced it to set aside a further $800 million to cover a potential fine for breaches in anti-money laundering controls in Mexico and other violations. The provision was on top of $700 million it put aside in July.
The bank, which is negotiating a settlement with United States authorities, is expected to pay the largest fine on record for money laundering and related actions.
The trouble at HSBC coincides with a widespread crackdown by US federal and state authorities into the illegal movement of money. Officials are moving to choke off the supply of American dollars to drug cartels and terrorist organisations.
HSBC also put aside more than $357 million in the period to compensate UK clients wrongly sold payment-protection insurance on loans as it posted an increase in pre-tax profit that missed analysts' estimates.
"The final amount of the financial penalties could be higher, possibly significantly higher," HSBC said in a statement today. "The resolution of at least some of these matters is likely to involve the filing of corporate criminal as well as civil charges."