HSBC to settle laundering case for $1.9b

The British bank is accused of handling money for Iran and Mexican drug cartels.
Associated Press/File 2012
The British bank is accused of handling money for Iran and Mexican drug cartels.

NEW YORK — State and federal authorities decided against indicting HSBC in a money laundering case over concerns that criminal charges could jeopardize one of the world’s largest banks and ultimately destabilize the global financial system.

Instead, authorities are expected to disclose Tuesday a record $1.9 billion settlement with the British bank, according to law enforcement officials briefed on the matter. The bank faces accusations that it transferred billions of dollars for nations like Iran and enabled Mexican drug cartels to move money illegally through its American subsidiaries.

While the settlement is a major victory for the government, the case also raises questions about whether certain financial institutions, having grown so large and so interconnected, are too big to indict.


Behind the scenes, authorities debated for months the advantages and perils of a criminal indictment against HSBC.

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Some prosecutors at the Justice Department’s criminal division and the Manhattan district attorney’s office wanted the bank to plead guilty to violations of the federal Bank Secrecy Act, according to the officials, who spoke on the condition of anonymity.

Despite the Justice Department’s proposed compromise, Treasury Department officials and bank regulators at the Federal Reserve and the Office of the Comptroller of the Currency warned against the aggressive stance, according to the officials briefed on the matter. When approached by the Justice Department for their thoughts, the regulators cautioned about the impact on the broader economy.

After months of discussions, prosecutors decided against a criminal indictment, but only after securing record penalties and wide-ranging sanctions.

The HSBC deal requires the bank to forfeit more than $1.2 billion and pay about $650 million in fines, according to the officials briefed on the matter.