July 16th, 2012
06:16 PM ET

Report: British bank used to launder billions for Iran, terrorists

By James O'Toole

Global banking giant HSBC failed to prevent billions of dollars worth of money transfers that Senate investigators believe were linked to drug cartels and terrorist groups, according to a report released Monday.

The Senate's Permanent Subcommittee on Investigations said London-based HSBC failed to review thousands of suspicious transactions and properly vet counterparties over the past decade.

The subcommittee found that HSBC worked extensively with Saudi Arabia's Al Rajhi Bank, some owners of which have been linked to terrorism financing.  Some evidence suggests the bank's "key founder" was "an early financial benefactor of al Qaeda," the report says.

The report also said HSBC's U.S. affiliate handled nearly 25,000 transactions involving Iran between 2001 and 2007, despite U.S. sanctions against the country.  Other HSBC affiliates making transfers to the U.S. frequently stripped information from the transactions that linked them to Iran in order to evade scrutiny.

Some HSBC executives in the U.S. were aware of this practice as far back as 2001, the report says. An outside review commissioned by HSBC found nearly $20 billion worth of transactions between 2001 and 2007 that may have been subject to U.S. sanctions.

HSBC said in a statement ahead of the hearing that it "takes compliance with the law, wherever it operates, very seriously."


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Filed under: Congress • Terrorism