HSBC money laun­der­ing re­port's re­lease de­layed

The Pak Banker - - COMPANIES/BOSS -

A US judge said that he would likely de­lay the re­lease of a re­port de­tail­ing how well HSBC Hold­ings Plc has com­plied with anti-money laun­der­ing re­quire­ments un­til a fed­eral ap­peals court could weigh in.

US District Judge John Glee­son in Brook­lyn, New York, did not rule on whether he would put on hold his or­der re­quir­ing the un­seal­ing of a re­port by a fed­eral mon­i­tor ap­pointed as part of a $1.9 bil­lion pact with the U.S. Jus­tice Depart­ment in 2012.

But Glee­son said he was "strongly in­clined" to grant HSBC a stay of his Jan. 28 or­der, and that a lawyer rep­re­sent­ing a HSBC mort­gage cus­tomer seek­ing its un­seal­ing would be un­likely to con­vince him oth­er­wise.

"He's go­ing to have a tough road con­vinc­ing me oth­er­wise," Glee­son said in court.

Glee­son said he still wanted HSBC and pros­e­cu­tors to pro­pose redac­tions to the re­port be­fore the case is taken up on ap­peal. He ex­tended the dead­line to com­plete that process from Feb. 12 to Feb. 26.

The hear­ing came af­ter Glee­son or­dered the re­lease of a Jan­uary 2015 re­port by Michael Cherkasky, a for­mer New York pros­e­cu­tor who was ap­pointed fed­eral mon­i­tor as part a fiveyear de­ferred pros­e­cu­tion agree­ment with HSBC.

The deal re­solved charges that HSBC had be­come a "pre­ferred fi­nan­cial in­sti­tu­tion" for Mex­i­can drug car­tels and other money laun­der­ers and con­ducted trans­ac­tions for cus­tomers in sev­eral coun­tries sub­ject to U.S. sanc­tions.

The re­port by Cherkasky, now the ex­ec­u­tive chair­man of the com­pli­ance com­pany Ex­iger, was to be kept un­der wraps.

But Hu­bert Dean Moore of Penn­syl­va­nia, who said he had been an HSBC mort­gage cus­tomer be­fore fil­ing for bank­ruptcy, asked that it be un­sealed so he could re­view whether HSBC "con­tin­ues to en­gage in un­safe and un­sound busi­ness prac­tices."

HSBC and the Jus­tice Depart­ment have op­posed un­seal­ing the re­port. They had ar­gued un­seal­ing the re­port could pro­vide a "road map" for crim­i­nals seek­ing to laun­der money and dis­cour­age peo­ple from co­op­er­at­ing with the mon­i­tor. Both HSBC and the Jus­tice Depart­ment have filed no­tices of ap­peal.

Sa­muel Sey­mour, HSBC's lawyer, said on Tues­day the rul­ing had hurt the bank by call­ing into ques­tion as­sur­ances given to for­eign reg­u­la­tors who, in be­ing con­vinced to pro­vide in­for- ma­tion to the mon­i­tor, were told the re­port would be kept se­cret.

"It af­fects reg­u­la­tory re­la­tion­ships it has to­day," he said in court. "The harm is be­ing felt now." The case is U.S. v. HSBC Bank USA NA et al, U.S. District Court, East­ern District of New York, No. 12-cr-00763.

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