A report detailing HSBC Bank USA’s attempts to fix its compliance failures will be made public despite both the bank and the U.S. Department of Justice fighting to keep the document under seal.
The 1,000-page report was prepared by an independent monitor charged with overseeing HSBC’s efforts to strengthen its anti-money laundering controls. The audit was part of a deferred prosecution agreement reached with the Justice Department following an investigation into the bank’s role in alleged money laundering for clients involved in drug trafficking and terrorism.
Presented to the courts last year, the report is said to detail a rocky road to reform that has reportedly faced resistance from leaders of HSBC’s investment unit, who were accused in the report of dragging their feet, bullying auditors and delaying progress.
A member of the public, Hubert Dean Moore, asked courts to unseal the report so he could search for information that could be used in his own pending case over a mortgage dispute.
The request to make the report public was opposed by both HSBC and the Justice Department amid concerns it would undermine ongoing monitoring. Both argued that the report was intended for use only by regulators and that making it public violated terms of the deferred prosecution agreement that contained assurances such reports would remain secret.
However U.S. District Judge John Gleeson in New York ruled that the report qualified as a “judicial record” and as such should be accessible by the public. Gleeson asked that he be presented with redacted versions of the report by mid-February.
HSBC faces ongoing investigations and prosecutions around the world for alleged compliance failings. Attention on the bank increased following ICIJ’s February 2015 Swiss Leaks investigation that revealed how HSBC’s private bank in Switzerland routinely facilitated transactions by violators of international sanctions, arms traffickers, tax evaders and other wrongdoers.
Fallout from the scandal has continued almost a year after the investigation was first published. News of a case by German authorities against the bank was reported by ICIJ partner Suddeutsche Zeitung earlier in January.
In Malta, Swiss Leaks reporting by The Malta Independent resulted in new parliamentary oversight of politicians’ finances following revelations two former ministers had kept secret Swiss accounts.
January also saw the resignation Lin Homer, head of Britain’s HM Revenue and Customs, amid criticism of the tax authority’s investigation into HSBC’s Swiss branch, and its perceived leniency in dealing with the bank’s tax evading clients. A senior HMRC official admitted for the first time that inquiries into the bank and its clients' Swiss accounts had been wound up, with only a single prosecution the end result. Earlier in January, it was reported that the City of London's Financial Conduct Authority would not take any formal action against the bank.
In Brazil, a senate committee established to probe HSBC’s role in widespread tax evasion prepared to ramp up its investigation after it received data from French authorities earlier in the month.
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