Federal judge approves HSBC deferred prosecution agreement

By Guest Contributor
July 3, 2013

By Brett Wolf, Compliance Complete

NEW YORK, July 3 (Thomson Reuters Accelus) - A U.S. federal judge has approved the Deferred Prosecution Agreement in which British banking giant HSBC will pay $1.9 billion to regulators and the Justice Department for operating with anti-money laundering weaknesses that among other things allowed drug cartels to launder hundreds of millions of dollars.

But when making the deal final, U.S. District Judge John Gleeson asserted that federal judges have the authority to review such agreements – a view both HSBC and the Justice Department had questioned – and mandated that both parties file quarterly reports with the court “to keep it apprised of all significant developments.”

“As long as the government asks the court to keep this criminal case on its docket, the court retains the authority to ensure that the implementation of the DPA remains within the bounds of lawfulness and respects the integrity of this Court,” Gleeson wrote in his opinion, which was filed late on Monday.

The deal requires HSBC to bolster its anti-money laundering program under the watchful eye of an independent compliance monitor, a role that will be played by former New York County prosecutor Michael Cherkasky. If HSBC meets its terms, the charges will be dismissed in five years.

Gleeson’s decision, which came after more than six months of deliberation, also addressed public dissatisfaction with the agreement.

“These criticisms boil down to the argument that the government should seek to hold HSBC criminally liable, rather than to divert HSBC from the criminal process. But even if I were to reject the DPA, I would have no power to compel the government to prosecute the pending charges against HSBC to adjudication,” Gleeson wrote.

A Justice Department spokesman declined comment.

Rob Sherman, a spokesman for HSBC, said the bank is making “good progress” implementing the agreement and since 2011 has “taken extensive actions to put in place the highest standards to protect against current and emerging threats from financial crime.” Still, he said, “there is much more to do, and ensuring the highest standards wherever we do business is an ongoing process.”

(This article was produced by the Compliance Complete service of Thomson Reuters Accelus. Compliance Complete provides a single source for regulatory news, analysis, rules and developments, with global coverage of more than 230 regulators and exchanges. Follow Accelus compliance news on Twitter: @GRC_Accelus)

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