HSBC is facing explosive allegations that South American drug cartels have used it to launder money, and that the bank systematically and deliberately failed to install the systems needed to catch illegal transactions.
The scale of US authorities' investigations into HSBC has so far only been hinted at in the bank's regulatory filings, but leaked documents show that prosecutors are looking into a wide range of alleged failings.
In one instance, the bank allegedly failed to raise any red flags when Drug Enforcement Administration agents posed as drug dealers deposited millions of dollars in Paraguayan banks and then transferred money to accounts in the US through HSBC.
The bank also continues to do business with so-called "casas de cambio" in Mexico, local currency exchanges used to send money abroad, without any of the proper systems for spotting suspicious transactions, it is claimed. The casas are often used by drug gangs, the DEA believes.
Documents from an investigation by the US Attorney's office in West Virginia were reported yesterday by Reuters. In a letter to the federal Department of Justice, a West Virginia official claimed HSBC was to previous money laundering failures "as a nuclear waste dump is to a municipal land fill".
"We continue to cooperate with officials in a number of ongoing investigations," HSBC said. "The details of those investigations are confidential, and therefore we will not comment on specific allegations."Reuse content