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Investment bank settles money laundering case

HSBC, one of the world's largest banking and financial services organizations, settled this month with U.S. investigators for a surprising $1.9 billion in a money laundering case against this global banking institution. The bank was accused of transferring funds through the United States from Mexican drug cartels and for nations such as Iran, a country currently under international sanctions.

"These banks are operating in an environment where you can't afford to have uncertainty attached to your name, and they are dependent on confidence from their investors," says the director of financial institutions at Fitch Ratings. "And that makes them keen to get past such events very quickly and settle."

According to reports, HSBC settled quickly to the money laundering charges, allegedly conceding that its anti-money laundering measures were inadequate and are working to "beef up its controls." U.S. law enforcement says that the investment bank will pay $1.25 billion in forfeiture and an additional $655 million in civil dues, which is being hailed as the "biggest penalty ever imposed on a bank."

Sources indicate that HSBC is likely to be accused of violating the Bank Secrecy Act and the Tracing With the Enemy Act which may or may not affect investor confidence in the financial institution.

HSBC has announced the acquisition of a new head of group financial crime compliance and group money-laundering reporting officer to further prove how serious they are about complying with the laws. They say that they will continue to strengthen their regulatory compliance policies and procedures to ensure that they don't encounter further business litigation in the future.

Source: Time Magazine, "HSBC Settles U.S. Money Laundering Case for $1.9 Billion," The Associated Press, Dec. 11, 2012

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