Global banking giant HSBC and its US affiliate concealed more than £10 billion in sensitive transactions to Iran, violating US transparency rules over a six-year period, a Senate panel said Tuesday.
HSBC executives were aware of the “concealed Iranian transactions” — which stripped all identifying Iranian information from documentation — as early as 2001 but allowed thousands of transactions to continue until 2007, according to a Senate report on HSBC shortcomings in stopping money laundering.
A review of HSBC’s use of so-called U-turn transactions, in which funds are sent into and then out of the United States through non-Iranian foreign banks, showed the bank conducted almost £16,000 transactions with Iran, amounting to £12.4 billion.
“The vast majority of the Iranian transactions, ranging from 75-90 percent over the years, were sent through HBUS (the bank’s US operation) and other US dollar accounts without disclosing any connection to Iran,” according to the report by the Senate Homeland Security Subcommittee on Investigations.
“From at least 2001 to 2007, two HSBC affiliates, HSBC Europe (HBEU) and later HSBC Middle East (HBME), repeatedly conducted U-turn transactions involving Iran through HBUS, many of which were not disclosed to the bank, even though they knew HBUS required full transparency to process U-turns.”
The US prohibits doing business with nations such as Iran, North Korea and Sudan, and its Office of Foreign Assets Control imposes tight restrictions, known as OFAC filters, to halt potentially prohibited transactions.
“HSBC’s chief compliance officer and other senior executive in London knew what was going on, but allowed the deceptive conduct to continue,” Senator Carl Levin, the subcommittee’s chairman, told a hearing where he and other lawmakers grilled HSBC executives and US Treasury officials for failing to sufficiently guard against money laundering.