HSBC accused of helping drug bosses, terrorists

A United States Senate committee has accused one of the world's largest banks, HSBC, of assisting "drug kingpins and rogue nations".

The Senate inquiry into money-laundering says HSBC allowed itself to be used as a conduit for drug syndicates and rogue nations including Iran, letting them launder money and circumvent US sanctions.

The year-long inquiry found HSBC concealed $US16 billion worth of transactions from Iran over six years, and that huge sums of Mexican drug money almost certainly passed through the bank.

HSBC executives have apologised and one top compliance executive at HSBC, David Bagley, now plans to resign.

Paul Thurston was among the HSBC executives grilled by the chairman of the committee looking into HSBC's activities, Senator Carl Levin.

"This is something people knew was going on at that bank.

Why was it allowed to continue?" Senator Levin asked.

"Some of the things I found frankly took my breath away, but every time I found a weakness I tried to ensure we took action," Mr Thurston replied.

The inquiry report says the bank failed to put in place safeguards, or in some cases intentionally ignored them.

And it paints a picture of a bank unwilling or unable to oversee the operations of its subsidiaries.

It says HSBC concealed sensitive transactions to Iran - violating American transparency rules over a six-year period.

Its Mexican branch shipped $US7 billion to the US over a two-year period, ignoring warnings that this almost certainly included drug money.

The bank stripped information from documents to conceal prohibited dealings with Iran and safeguards were ignored in cases involving Saudi and Bangladeshi banks with alleged connections to international terrorism.

The report also points a finger at the US bank regulator for failing to properly monitor HSBC.

Senator Levin says investigators have found a "polluted" system.

"One HSBC executive told us that a major reason why HSBC opened its US bank was to provide its overseas clients with a gateway into the US financial system," he said.

"Now on top of that HBUS history of weak anti-money laundering controls...

and you've got a recipe for trouble."

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