HSBC Enters Into Deferred Prosecution Agreement over Money Laundering and Sanctions Violations

On December 11, 2012, HSBC Holdings plc (HSBC Group) and HSBC Bank USA N.A. (HSBC Bank USA), a federally chartered banking corporation headquartered in McLean, Virginia, 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 Enemy Act (TWEA).  Court documents allege that HSBC Bank USA violated the BSA by failing to maintain an effective anti-money laundering program and 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.[1]