HSBC "not protected" from criminal investigation by DoJ money laundering deal, says prospective attorney general Loretta Lynch

Catherine Neilan
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HSBC: Not protected by deal (Source: Getty)
HSBC could face prosecution by the US's Department of Justice, as it comes under renewed pressure over the actions of its Swiss subsidiary.
Loretta Lynch, Barack Obama's nominee for attorney general, was part of a team that secured nearly $2bn (£1.3bn) from HSBC over charges that it refused to prevent money laundering by drug cartels and terrorists.
The agreement, negotiated two years ago, did not result in any criminal proceedings being brought.
In a letter to the Republican chairman of the Senate judiciary committee Chuck Grassley, she said HSBC would not receive “any protection against prosecution for conduct beyond what was described” at the time.
She added: “I should note the [Deferred Prosecution Agreement, relating to the money laundering case] explicitly mentions that the agreement does not bind the Department’s tax division, nor the fraud section of the criminal division.”
This was important to note “particularly in the context of recent media reports regarding the release of HSBC files pertaining to its tax clients”, she added.
More generally Lynch said she would “vigorously pursue perpetrators of fraud and financial abuse, including, where appropriate, by prosecuting crimes related to the 2008 financial crisis”.
Not all cases would need to be investigated under criminal prosecution, Lynch said, noting there were “civil remedies” that had already resulted in record settlements that helped provide consumer relief to those affected by the financial crisis.
Lynch's own office led the investigation Bank of America, from which the firm paid out $16.65bn (£10.9bn) for financial fraud leading up to and during the financial crisis – the largest civil settlement with a single entity in US history.
Her office also participated in an investigation into Citigroup “for misleading investors about residential mortgage-backed securities containing toxic mortgages”, which resulted in a $7bn (£4.6bn) global settlement.
Lynch said: “In short, I am committed to using all of the Department’s enforcement tools, whether civil or criminal, and to working with all of our partners, whether federal, state, local, tribal, territorial, or foreign, to combat fraud and financial abuse.
“I am confident that we will succeed in restoring the integrity of our markets, preserving taxpayers’ resources, and protecting the vast majority of hardworking Americans, investors, and businesses who play by the rules and adhere to the law."

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