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Oh, now he’s sorry.
HSBC’s top compliance official quit in front of a Senate panel yesterday — but only after a damning report accusing the global banking giant of allowing Mexican drug cartels and Middle Eastern banks with terrorist ties to launder billions of dollars through its US operations for years.
“Now is the appropriate time, for me and for the bank, for someone new to head group compliance,” David Bagley said during a hearing before the Senate Permanent Subcommittee on Investigations.
Bagley’s resignation — along with apologies from other HSBC officials — follows the subcommittee’s scathing findings that the bank skirted US bans on financial transactions with suspect or “rogue” nations, including Syria, Mexico and Iran.
Bagley was specifically named in the report as having been aware of the problem since at least 2002.
From 2000 until 2009, for instance, HSBC gave Mexico its lowest risk rating “despite overwhelming information indicating that Mexico was a high-risk jurisdiction for drug trafficking and money laundering.”
In 2007, HSBC’s head of Latin American compliance blasted the bank’s Mexican unit for “rubber-stamping unacceptable risks,” according to an e-mail cited in the report. The internal warnings were ignored and, as a result, banking clients from Mexico escaped enhanced due diligence and account monitoring.
HSBC, Europe’s largest bank, has a $210 billion operation in the US, ranking it a top-10 banking operation. HSBC is also being probed by the US Justice Department, the Treasury and the Manhattan District Attorney. It could face fines and penalties of as much as $1 billion, analysts said.