HSBC let drug gangs launder millions: First Barclays, now Britain's biggest bank is shamed - and faces a £640million fine

• HSBC moved huge sum from Mexico into the U.S. between 2007 and 2008
• Provided services for Saudi Arabia's Al Rajhi Bank linked to financing terrorism
• Senate investigation suggests they also moved money tied to Iran
• Accuses bank of 'pervasively polluted' culture
• Another hammer blow to the credibility of British banking system after Barclays was fined for allegedly rigging LIBOR interest rate

By Rob Davies and Tim Shipman

PUBLISHED: 13:23 GMT, 17 July 2012 | UPDATED: 22:10 GMT, 17 July 2012

Britain's biggest bank allowed rogue states and drugs cartels to launder billions of pounds through its branches.

HSBC stands accused of fostering such a ‘polluted’ culture it became a conduit for criminal enterprises.

A top executive at the bank sensationally quit yesterday in front of a US Senate hearing that exposed the scale of the scandal.

Following the Barclays rate-fixing revelations, it deals another blow to the City of London’s reputation.

HSBC – one of the few UK banks to survive the financial crisis with its reputation intact – now faces up to £640million in penalties. A devastating 335-page Senate report accused HSBC of ignoring warnings and breaching safeguards that should have stopped the laundering of money from Mexico, Iran and Syria.

The bank failed to monitor a staggering £38trillion of money moving across borders from places that could have posed a risk, including the Cayman Islands and Switzerland. The failures stretched to dealings with Saudi Arabian bank Al Rajhi, which was linked to the financing of terrorism following 9/11.

HSBC’s American arm, HBUS, initially severed all ties with Al Rajhi. But it later agreed to supply the Saudi bank with US banknotes after it threatened to pull all of its business with HSBC worldwide.

According to the report, HBUS also accepted £9.6billion in cash over two years from subsidiaries without checking where the money came from.

In one instance, Mexican and US authorities warned HSBC that £4.5billion sent to the US from its Mexican subsidiary ‘could reach that volume only if they included illegal drug proceeds’.

Concerns over the bank’s links to Mexican drug dealers included £1.3billion stashed in accounts in the Cayman Islands. One HSBC compliance officer admitted the accounts were misused by ‘organised crime’.

London-based banker David Bagley, head of HSBC’s compliance division, which is meant to prevent breaches of the law, quit in front of the Senate committee. He had been with the bank for 20 years.

The affair is also an embarrassment for David Cameron, because his trade envoy Stephen Green chaired HSBC during the period covered by the allegations.

FULL STORY: http://www.dailymail.co.uk/news/article-2174785/HSBC-scandal-Britai...