CEO: HSBC 'an easy target' for criminals

Feb 06 2013 15:06

London - HSBC's biggest ever restructuring had been necessary to simplify the bank's complex structure and wide geographical spread which had made it attractive to money-laundering criminals, its Chief Executive said.

"Our structure was not fit for purpose for a modern world," Stuart Gulliver told lawmakers on a British banking inquiry on Wednesday.

HSBC was fined $1.9bn in December, the largest ever paid by a bank, followed a US investigation into its Mexican and US operations that made scathing criticism of its anti-money-laundering systems. The lax controls allowed two cartels to move $881m in drug proceeds through the bank, according to US prosecutors.

"To be honest, our geographic footprint became very attractive to trans-national criminal organisations, whether they are terrorist in origin or criminal in origin," Gulliver said.

After taking the helm at the start of 2011, Gulliver centralised control and created global business operations, taking much of the control out of the hands of regional managers.

"It's the biggest organisational change in this firm since 1865 and we did it to deal with the weaknesses," Gulliver said.

HSBC's problems in Mexico stemmed from its purchase of Grupo Financiero Bital in 2002, which was bought cheaply as it was distressed. HSBC chairperson Douglas Flint said the bank was too slow to improve its systems and controls.

"There were things we were not aware of, and standards we believed were being applied that were not," Flint said.

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hsbc  |  money laundering



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