Deloitte to Review Laundering Compliance at HSBC

Lucas Gilmore, “Big 4″ observer
November 15, 2010 /

After an investigation conducted by the Federal Reserve Bank of Chicago and the Office of the Comptroller of the Currency showed “a significant potential for unreported money laundering or terrorist financing” inside HSBC, Deloitte has been tasked by the bank to probe its “ineffective compliance” programs.

The Office of the Comptroller of the Currency issued last month a “cease and desist” order to the HSBC, requiring the bank to revamp its internal controls due to this alleged anomaly and review its previous and present transactions worth thousands of billions of dollars with the help of an independent auditor. However, HSBC refused to comment on whether it hired Deloitte or other audit company.

Though HSBC admitted the possibility to be subjected to formal investigations, it said in a regulatory filing last week that it was “unable at this time to determine the terms on which it might be brought, the timing of any possible regulatory resolution or enforcement action or the amount of fines or penalties, if any, that may be imposed by the regulators or agencies.”

The ongoing investigations come at a critical time for HSBC, which is based in London, but expanded aggressively in the US over the past decade. Stephen Green, group chairman, left in September to join the UK government, setting off a succession race that ended with the exit of Michael Geoghegan as chief executive.

In June, Brendan McDonagh unexpectedly announced his retirement as chief executive of HSBC’s North American unit. He was replaced by Niall Booker, his deputy.

 

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