HSBC ignored warnings on US$80mn suspect payments

HSBC has been accused of allowing international payments to accounts at its Hong Kong office that were linked to a suspected Ponzi scheme, despite being warned that they were suspicious.

The claims were contained in a trove of thousands of US regulatory documents leaked to a consortium of international media including the BBC, Buzzfeed and the International Consortium of Investigative Journalists.

HSBC is reported to have processed some US$80 million to accounts linked to a scheme which was said to involve cloud computing. US regulators believed that it was a Ponzi scheme – a fraud in which investors are only paid a return through new investments, rather than from a business.

The reports say the bank allowed the money to move into the Hong Kong accounts in 2013 and 2014 despite filing several reports to US regulators indicating suspicious about the recipient.

HSBC closed the accounts only when the US Securities and Exchange Commission filed charges against the organizers of the scheme in April 2014.

A host of other major international banks were also revealed to have allowed transactions to go ahead despite flagging warnings to the regulators.

ICIJ research showed that HSBC was linked to about US$1.5 billion in suspicious activity between 2011 and 2017, the period covered by the leaked reports.

It includes a five-year period covered by a 2012 agreement with US prosecutors, who agreed not to prosecute the bank over a case involving Mexican drug cartels as long as it improved anti-money-laundering procedures.

The bank told the BBC that it had been constantly improving procedures since the 2012 agreement.

(Source: RTHK)