OCC Assesses $500 Million Civil Money Penalty Against HSBC Bank USA, N.A.

WASHINGTON — The Office of the Comptroller of the Currency (OCC) announced today a $500 million civil money penalty against HSBC Bank USA, N.A., McLean, Virginia.

The OCC based its penalty on the bank’s violating the Bank Secrecy Act (BSA) and its underlying regulations, and the bank's failure to fully comply with a cease and desist order issued in October 2010 addressing these violations. The order required the bank to take comprehensive corrective actions to improve its BSA compliance program, while deferring the OCC's decision on assessing a penalty. The OCC also announced that it has issued a separate cease and desist order to address deficiencies in the bank's enterprise-wide compliance program. Further, the OCC entered into an agreement with the bank pursuant to the requirements of the Gramm-Leach-Bliley Act (GLBA).

"Today's $500 million penalty against HSBC for violating the Bank Secrecy Act is the largest penalty ever assessed by the OCC," said Comptroller of the Currency Thomas J. Curry. "The size of the penalty reflects the severity and duration of the violations. It demonstrates the OCC's resolve to take firm action when warranted to ensure compliance with the law and to hold banks accountable when they fail to live up to those standards."

The bank is an indirect, wholly-owned subsidiary of HSBC North America Holdings, Inc., New York, New York (HNAH), a registered bank holding company. HNAH is an indirect, wholly-owned subsidiary of HSBC Holdings plc, London, United Kingdom (HSBC), a registered bank holding company.

The OCC penalty is part of a coordinated action with the U.S. Department of Justice, the Board of Governors of the Federal Reserve System, the Financial Crimes Enforcement Network, the Office of Foreign Assets Control, and the New York County District Attorney's Office.

"This announcement is the culmination of hard work by dedicated professionals at a number of agencies. Each of them deserves our gratitude for their work to safeguard financial institutions operating in this country against being used as vehicles to launder money for drug traffickers and criminal organizations, or being used to facilitate the financing of terrorism," Comptroller Curry said. "The actions taken against HSBC are a milestone for BSA compliance and enforcement that also serve to remind us that we must remain vigilant against these abuses and continue to work to prevent criminals and terrorists from taking advantage of our nation's financial institutions. The action also highlights the importance of banks' effectively managing operational risk and the consequence of failing to do so."

Concurrent with the OCC's enforcement actions, the bank and HSBC entered into a deferred prosecution agreement with the Department of Justice, and agreed to forfeit $1.256 billion to the United States. Payment of the forfeiture satisfies settlements with the Office of Foreign Assets Control and the New York County District Attorney's Office. The Board of Governors of the Federal Reserve System assessed a joint $165 million civil money penalty against HSBC and HNAH, and entered into a cease and desist order upon consent with HSBC. The Financial Crimes Enforcement Network assessed a $500 million civil money penalty against the bank that is satisfied by payment of the OCC's civil money penalty.

Related Links

• Consent Cease and Desist Order (PDF)
• Consent Order for a Civil Money Penalty (PDF)
• Formal Agreement Related to GLBA (PDF)
• Remarks by Comptroller of the Currency Thomas J. Curry (PDF)