THE Federal Reserve said yesterday that it issued an order against HSBC North American Holdings requiring the bank to improve company-wide risk management, including practices to prevent money laundering.
It said that within 30 days, the bank’s board of directors must submit a plan for strengthening oversight of its compliance risk-management programme. The plan must show how risk is being managed within and across business lines, legal entities and jurisdictions in which the bank operates.
HSBC is also required to submit to the Fed a company-wide compliance risk assessment that contains recommendations for improving controls and provides an evaluation of its compliance risk exposure.
Last February, a senior US senator said he was referring HSBC Holdings to its US bank regulator in connection with questionable accounts it provided for senior Angolan officials.
Senator Carl Levin, who chairs the Permanent Subcommittee on Investigations, said he was referring the issue to the Office of the Comptroller of the Currency, an arm of the US Treasury, due to concerns that tainted foreign money might be flowing into the US.
The action caps a turbulent time for HSBC, which last month underwent a shake-up of its senior management.
Earlier this month, two clients of HSBC Holdings were convicted of failing to report more than $49m (£31m) in income to the US Internal Revenue Service.
The two Miami Beach-based developers, Mauricio and Leon Cohen, used shell enterprises and offshore tax havens in the Bahamas and elsewhere to conceal assets and income.
City A.M. Reporter