Criminals found an easy place to launder money at HSBC Bank USA, according to allegations contained in documents from a federal investigation of the bank, Reuters news agency reported Thursday.
Reuters reporters said they reviewed confidential documents from investigations by two U.S. attorney's offices of HSBC Bank USA, which is the U.S. arm of HSBC Holdings Plc of London.
U.S. attorneys in Florida and West Virginia are investigating claims that HSBC violated money laundering laws by failing to review transactions for possible connections to crimes including drug trafficking and terrorist financing.
The bank divulged in regulatory documents in February that it is being investigated by the Justice Department, the Federal Reserve and other authorities, and said it is likely to face criminal or civil litigation, Reuters reported. No one from the bank has been charged with a crime.
The documents were early drafts written by investigating U.S. attorneys and could have been superseded by subsequent investigation, Reuters reported. It quoted from a draft of a 2010 letter from William J. Ihlenfeld II, U.S. attorney for the northern district of West Virginia, who told Justice Department officials that HSBC's anti-money laundering departments were a "systemically flawed sham paper-product designed solely to make it appear that the Bank has complied" with the Bank Secrecy Act, which requires banks to monitor transactions for money laundering.
The bank issued a statement to Reuters, saying, "We continue to cooperate with officials in a number of ongoing investigations. The details of those investigations are confidential, and therefore we will not comment on specific allegations."