LENDING & CREDIT | Cesar Tordesillas, India

HSBC India found deficient vs laundering, terror financing

The staff of HSBC India have come under the scanner for deficiencies in acting as "offshore reviewers" against money laundering and terrorist financing.

A probe by the US senate's permanent subcommittee on investigations found that HSBC's anti-money laundering compliance department, which included employees in India, was highly inadequately staffed.

Besides, deficiencies were found in the quality of the work done by HSBC's "offshore reviewers in India", who were used for clearing a major backlog of suspected transaction alerts at the bank.

More than one-third of the alerts already resolved by the Indian reviewers and others "had to be re-done."

The probe further found that a US office of the comptroller of the currency visit to India in 2007 had revealed "Weak Monitoring Procedures" in the bank's internal control systems.

HSBC has apologised for its mistakes and gave its "absolute commitment" to fix the problems.

The 340-page investigation report, which was released yesterday, found HSBC to have used its US bank (HSBC US Bank or HBUS) as a gateway into the US financial system to provide US dollar services to clients while "playing fast and loose with US banking rules," Senator Carl Levin, the chairman of the subcommittee, said.



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