12-12-12 HSBC Bank settlement leads to nearly $2 billion in forfeitures, penaltiesLatest Headlines Wednesday, December 12th, 2012 Would you like to receive e-mail alerts when we have breaking news? Click here!
Would you like to receive e-mail alerts when we have breaking news? Click here!
WHEELING, W.Va. — One of the largest settlements of a criminal case in the history of the American justice system was reached in large part because of the efforts of federal prosecutors and agents from Northern West Virginia.
HSBC Holdings PLC, a United Kingdom corporation headquartered in London, and HSBC Bank USA N.A., a federally chartered banking corporation headquartered in McLean, Va., have agreed to forfeit $1.256 billion and enter into a deferred prosecution agreement with the Justice Department for HSBC’s violations of the Bank Secrecy Act (BSA), the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA). The HSBC banks have also agreed to pay $665 million in civil penalties as a result of its illegal conduct, for penalties totaling $1.92 billion.
A four-count felony criminal information was filed against HSBC yesterday in federal court in the Eastern District of New York by Northern West Virginia U.S. Attorney William Ihlenfeld, II, Brooklyn U.S. Attorney Loretta Lynch, and Jaikumar Ramaswamy, the head of the Asset Forfeiture and Money Laundering Section of the Department of Justice.
The information filed by Ihlenfeld and the others charges HSBC with willfully failing to maintain an effective anti-money laundering (AML) program, willfully failing to conduct due diligence on its foreign correspondent affiliates, violating IEEPA and violating TWEA. HSBC has waived federal indictment, agreed to the filing of the information and has accepted responsibility for its criminal conduct and that of its employees.
According to documents filed with the court, HSBC Bank USA violated the BSA by failing to maintain an effective anti-money laundering program and to conduct appropriate due diligence on its foreign correspondent account holders. The HSBC Group violated IEEPA and TWEA by illegally conducting transactions on behalf of customers in Cuba, Iran, Libya, Sudan and Burma, all countries that were subject to sanctions enforced by the Office of Foreign Assets Control (OFAC) at the time of the transactions.
The investigation in West Virginia was a spin off of the investigation of Dr. Barton Adams, who laundered over $2 million through HSBC as part of a health care fraud scheme while HSBC stood silent instead of filing alerts as required by law.
Dr. Adams was convicted last month of “Health Care Fraud” and “Tax Evasion” in federal court in Wheeling and faces up to 15 years in prison when sentenced. His wife was convicted last year on similar charges and also faces the possibility of a lengthy prison term.
U.S. Attorney Ihlenfeld was quick to praise the work of the investigators who helped to develop the case in West Virginia.
“I commend the work of the IRS-CI and FinCEN agents, as well as the work of the attorneys in my office, for helping to uncover the inadequacy of HSBC’s anti-money laundering program,” said U.S. Attorney Ihlenfeld. “Their efforts played a key role in the resolution of this case and helped to bring an end to illegal activity that was occurring in the United States and around the world.”
Many local agents and attorneys contributed to the case but four stood out: FinCEN Senior Special Agent Bryant Moravek, IRS-Criminal Investigation Special Agents Ryan Korner and Jason Gandee, and Assistant U.S. Attorney Michael Stein. Each of these individuals were recently presented with 2012 United States Attorney’s Award for their efforts in investigating HSBC. Stein’s efforts were so impressive that a United States Senate Subcommittee investigating HSBC for money laundering activities specifically recognized him in bringing the illegal activity to light.
“There is no doubt that without the dedication and commitment of these men, HSBC’s violations would have continued unabated long into the future,” said Ihlenfeld. “They were among the first to expose HSBC’s illegal money laundering activities and the immense dangers they presented to our nation, and helped in a most significant way to set into motion the events that have resulted in one of the largest settlements of its kind.”