An investigation by a House committee alleges that the government failed to prosecute a bank over money-laundering violations – despite clear recommendations to do so – out of worry about impacts to the financial system
The House Financial Services Committee has released a staff report that alleges that political considerations may have played a part in the Justice Department’s decision not to prosecute HSBC for money-laundering offenses.
In 2012, HSBC entered into a settlement with the New York County District Attorney’s Office and a laundry list of federal regulators over allegations that the bank had violated money-laundering laws and related regulations, including the Bank Secrecy Act – and, by conducting business for customers in countries like Iran and Libya, the Trading With the Enemy Act. Under the settlement, HSBC entered into a five-year “deferred prosecution” agreement with the justice department and agreed to pay penalties of $1.92 billion to the government.
But Republicans on the House Financial Services Committee wanted to know why neither the bank nor any of its officers faced criminal penalties. The committee’s Republican staff launched an investigation in March of 2013. According to a House Financial Services Committee press release, both the Treasury and Justice departments “failed to comply with the Committee’s requests to obtain relevant documents, necessitating the issuance of subpoenas to both agencies.”
Three years after its initial requests, the committee “finally obtained copies of internal Treasury records showing that DOJ has not been forthright with Congress or the American people concering its decision to decline to prosecute HSBC.”
The report alleges that senior Justice leadership, including then-Attorney General Eric Holder, overruled an internal recommendation to prosecute HSBC on money-laundering offenses because of concern that prosecuting the bank could adversely impact the financial system. The report also alleges that the Justice Department and federal regulators rushed with “what one Treasury official described as ‘alarming speed’ to complete their investigations and enforcement of actions involving HSBC” – apparently in order to beat the New York Department of Financial Services to the punch.
The report also states that the Justice Department has failed to produce any records supporting its “prosecutorial decision making” in the HSBC case, “notwithstanding the Committee’s multiple requests for this information and a congressional subpoena requiring Attorney General Lynch to timely produce these records to the Committee.”
In 2012, HSBC entered into a settlement with the New York County District Attorney’s Office and a laundry list of federal regulators over allegations that the bank had violated money-laundering laws and related regulations, including the Bank Secrecy Act – and, by conducting business for customers in countries like Iran and Libya, the Trading With the Enemy Act. Under the settlement, HSBC entered into a five-year “deferred prosecution” agreement with the justice department and agreed to pay penalties of $1.92 billion to the government.
But Republicans on the House Financial Services Committee wanted to know why neither the bank nor any of its officers faced criminal penalties. The committee’s Republican staff launched an investigation in March of 2013. According to a House Financial Services Committee press release, both the Treasury and Justice departments “failed to comply with the Committee’s requests to obtain relevant documents, necessitating the issuance of subpoenas to both agencies.”
Three years after its initial requests, the committee “finally obtained copies of internal Treasury records showing that DOJ has not been forthright with Congress or the American people concering its decision to decline to prosecute HSBC.”
The report alleges that senior Justice leadership, including then-Attorney General Eric Holder, overruled an internal recommendation to prosecute HSBC on money-laundering offenses because of concern that prosecuting the bank could adversely impact the financial system. The report also alleges that the Justice Department and federal regulators rushed with “what one Treasury official described as ‘alarming speed’ to complete their investigations and enforcement of actions involving HSBC” – apparently in order to beat the New York Department of Financial Services to the punch.
The report also states that the Justice Department has failed to produce any records supporting its “prosecutorial decision making” in the HSBC case, “notwithstanding the Committee’s multiple requests for this information and a congressional subpoena requiring Attorney General Lynch to timely produce these records to the Committee.”
