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Copyright 2016 NPR. To see more, visit http://www.npr.org/.

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HSBC Executive Resigns During Money Laundering Hearing

Jul 17, 2012
Originally published on July 17, 2012 7:06 pm

David Bagley, HSBC's head of group compliance, resigned in the middle of a Senate hearing today that was looking into charges that the bank had been lax in meeting government requirements, allowing Mexican cartels to launder money and giving terrorists access to the American banking system.

Bloomberg reports:

"Bagley was among at least six HSBC executives who testified before the Senate's Permanent Subcommittee on Investigations today after the panel released a 335-page report describing a decade of compliance failures by Europe's biggest bank. London- based HSBC enabled drug lords to launder money in Mexico, did business with firms linked to terrorism and concealed transactions that bypassed U.S. sanctions against Iran, Senate investigators said in the report.

"'As I have thought about the structural transformation of the bank's compliance function, I recommended to the group that now is the appropriate time for me and for the bank for someone new to serve as the head of group compliance,' Bagley said. 'I have agreed to work with the bank's senior management towards an orderly transition of this important role.'"

The Wall Street Journal reports that the investigation focused a lot of attention on the Mexican side. It noted that HSBC's Mexican arm sent up to $4 billion in bank notes "by car or aircraft to the HSBC bank in the U.S."

"U.S. authorities have flagged such volume of bulk cash shipments for scrutiny, in part because drug cartels are believed to use such flows of money to hide illicit proceeds," the Journal reports.

According to The Telegraph, Stuart Gulliver, chief executive of HSBC, issued an apology.

"We have sometimes failed to meet the standards regulators and customer expect... we take responsibility for fixing what went wrong," he said.

The Telegraph adds that HSBC will likely face a hefty fine of up to $1 billion.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.