HSBC [London:HSBA] became the latest banking giant mired in scandal on Thursday after it emerged the British lender will be fined $1 billion for money laundering offences.
According to an internal memo, HSBC revealed that it will acknowledge and apologize to a U.S. Senate hearing next week for failing to spot money laundering that could have been used to finance terrorism and organized crime.
The latest banking scandal follows the record fines received by fellow British bank Barclays [London:BARC] for its part in fixing the Libor-rate.
In a memo which originated in Hong Kong, the bank will say that has failed to implement the appropriate systems and controls in order to prevent the possibility of financing terrorism and other criminal activities through money laundering from 2004 to 2010.
We failed to spot and deal with unacceptable behavior. It is right that we are held accountable and that we take responsibility for fixing what went wrong, CEO Stuart Gulliver said, according to Reuters.
Between 2004 and 2010, our anti-money laundering controls should have been stronger and more effective, and we failed to spot and deal with unacceptable behavior.
In a bid to eradicate laundering in the future, HSBC CEO Stuart Gulliver told Agence-France Presse the bank will continue to up its compliance budget, having raised its spending on this to $400 million from $200 million in 2010.
HSBC confirms that it will testify before the Senate Permanent Subcommittee on Investigations on July 17, a spokesman said.
As disclosed in regulatory filings, HSBC has been fully cooperating with the PSI and regulatory authorities in the United States in relation to these issues. We will be discussing a number of compliance issues with members of the Subcommittee, including past AML practices and in particular HSBC's remediation and resolution of compliance matters.
The Board and leadership of HSBC are fully committed to implementing the highest standards and have already made significant changes to our organisation's structure to bring this about, added the spokesperson.