Step brings final closure to extensive money laundering and sanctions violations that resulted in an unprecedented $1.9 billion fine in 2012.
The US Federal Reserve indicated in an announcement distributed early Friday (Asia time) that it had terminated its enforcement action against HSBC, bringing to an end a chapter that had caused immense reputational and business damage to its franchise worldwide.
The original 2012 cease and desist order levied in connection with money laundering and sanctions violations resulted in fines of $1.9 billion and an additional civil penalty of $165 million. In the 2010s, it was one of the largest financial settlements against banks, as a «Wall Street Journal» graphic indicates.
Willful Violation
At the time, the US government levied a deferred prosecution agreement against the bank, after HSBC admitted to willfully violating AML laws through substantive high-risk transactions at its Mexican subsidiary as well as sanctions violations in connection with its business in Europe and the Middle East. The step prompted a subsequent wide-scale overhaul and expansion of its financial crime and risk management capabilities and processes.
The end of the order means that HSBC no longer must provide annual assessments to the US Treasury or conduct yearly reviews of its policies and procedures and risk assessments of transactions involving group affiliates. It also no longer needs to submit quarterly progress reports to the Fed.
