HSBC to Apologise Over Lax Money Laundering controls

Global banking giant HSBC Holdings will apologise to a US Senate hearing next week for failures in its anti-money laundering controls, a report said Wednesday. HSBC will tell lawmakers at the 17 July hearing that "unacceptable behaviour" has slipped through its monitoring systems, according to an internal memo quoted by Dow Jones Newswires. In the note sent to employees on Tuesday, the London-based lender's chief executive Stuart Gulliver said the Permanent Subcommittee on Investigations would expose weaknesses in the bank's money laundering controls.

"Between 2004 and 2010, our anti-money laundering controls should have been stronger and more effective and we failed to spot and deal with unacceptable behaviour," Gulliver said in the memo, according to Dow Jones. The subcommittee is expected to examine money laundering and terrorist financing involving high-risk clients. Gulliver said HSBC was not aware of the details of the panel's investigation, but expected it to "reveal that in the past we fell well short of the standards that our regulators, customers and investors expect".

"It is right that we be held accountable and that we take responsibility for fixing what went wrong," Gulliver said, adding that US authorities could take enforcement action over the coming months. HSBC will continue to invest in compliance, having raised its spending on this to $400 million from $200 million in 2010, he added. An HSBC official in Hong Kong, where the bank has a secondary listing, did not immediately respond to requests for comment on the report.

HSBC was one of the British banks -- along with Barclays, Lloyds and Royal Bank of Scotland -- ordered last month to pay for misleading businesses over interest rate insurance. The global banking system's reputation has been blackened by an interest rate-rigging scandal that erupted at Barclays and threatens to spread to other lenders. Britain's Serious Fraud Office on Friday launched an investigation into the scandal after announcing that it was considering criminal prosecutions.