June 24, 2018
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Mexico fines HSBC $28 million in laundering case

The Associated Press

MEXICO CITY — Mexican regulators have levied a $28 million fine against the Mexico subsidiary of London-based HSBC bank for failing to prevent money laundering through accounts at the bank.

Mexico’s National Securities and Banking Commission said Wednesday that HSBC has paid the fines, equivalent to 379 million pesos, or about half of the subsidiary’s 2011 annual profits.

The commission, and a report by a U.S. senate investigative committee, found the bank failed to control suspicious flows of billions of dollars through its accounts and didn’t respond promptly after being warned about a huge swell in dollar cash transactions at the bank.

Guillermo Babatz, president of the banking commission, said that at its peak in the mid-2000s, HSBC had become the main shipper of dollar cash transfers from Mexico to the United States, accounting for about half of the total flow, even though it wasn’t then among the country’s largest banks.

Babatz said that regulators detected the swell of suspicious transactions and warned local management in 2007 and 2008, but got little response. He said regulators then took the unusual step of contacting top management of the bank’s central offices. “When we contacted the head offices, it was because we were very worried and didn’t get a response” from local management, who he said “minimized the risks.”

The commission said Wednesday the violations began in the early 2000s.

A U.S. Senate investigative committee said that in 2007 and 2008 HSBC Mexico sent north about $7 billion in cash. “Bulk cash shipments could reach that volume only if they included illegal drug proceeds,” the committee concluded in a report.

HSBC Mexico acknowledged in a statement that it failed to report 39 suspicious transactions and had been late in reporting 1,729 others.

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