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HSBC compliance official quits, apologizes to Senate over bank's lapses

WASHINGTON — The head of compliance at Europe's largest bank resigned from his position and apologized Tuesday after a Senate investigation found HSBC had lax controls that exposed it to money laundering and terrorist financing.

David Bagley told the Senate investigations panel that he will remain at the London-based bank in a new role.

Other HSBC executives also apologized at the hearing, which focused on the bank's lapses. But all said they weren't fully aware of illicit transactions flowing through the bank.

Sen. Tom Coburn of Oklahoma, the Senate Permanent Subcommittee on Investigations' senior Republican, said he found it hard to believe that HSBC executives didn't know what was going on.

The panel released a report Monday that found the bank's poor oversight of its operations allowed Mexican drug cartels to launder billions of dollars through its U.S. division.

HSBC bank affiliates also skirted U.S. government bans against financial transactions with Iran and other countries, according to the report. And HSBC's U.S. division provided money and banking services to some banks in Saudi Arabia and Bangladesh believed to have helped fund al-Qaida and other terrorist groups, the report said.

The report also blamed U.S. regulators, saying they knew the bank had a poor system to detect problems but failed to take action.

HSBC should close its accounts with banks suspected of providing funding to terrorist groups, said Sen. Carl Levin, the panel's chairman.

The U.S. Justice Department said it is conducting a criminal investigation into HSBC's operations but declined to confirm that the bank is in settlement talks.

HSBC compliance official quits, apologizes to Senate over bank's lapses 07/17/12 [Last modified: Tuesday, July 17, 2012 8:27pm]
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