December 10, 2012

After running into trouble over massive money-laundering lapses, HSBC has promoted a former U.S. official who fought drugs traffickers to the new role of head of group financial crime compliance and group money laundering officer. The bank said it was separating financial crime compliance from other areas of compliance, and will set up a financial intelligence unit to carry out in-house investigations into potential regulatory breaches.

The new head of financial crime compliance, Bob Werner, will be responsible for strategy, standards and systems in anti-money laundering, counter-terrorist financing, proliferation funding, anti-bribery and sanctions. Werner joined HSBC in August and was previously head of the U.S. Treasury Department's Office of Foreign Assets Control and Financial Crimes Enforcement Network. After that, he worked at Goldman Sachs and Bank of America Merrill Lynch.

In July, a U.S. Senate report criticized HSBC for letting clients shift potentially illicit funds from the Cayman Islands, Iran, Mexico, Saudi Arabia and Syria.

HSBC is expected to be slapped with a fine of up to $1.5 billion, following its own admission that it did very little – for six years - to prevent money laundering despite strict regulations on the matter.

The bank has called its actions – or failure to act – “shameful and embarrassing.” A number of staff have left the firm as a result of the investigation and a number had had pay clawed back, HSBC previously noted.

Existing anti-money laundering regulations for banks include having a customer due diligence program, appointing an anti-money laundering compliance officer, developing an ongoing training program for employees, audit procedures to test the effectiveness of an anti-money laundering program and reporting any suspicious activity.

ABOUT THE AUTHOR
Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news, and film trade news. Prior to joining Wall Street & Technology in ...