A bank with a long history in scandal and controversy is back under the microscope after an alleged $4 billion money-laundering operation worked until its nose.
The money laundering ring came years after the bank promised to better monitor money-laundering operations.
It’s the latest controversy for HSBC bank, which is based in London but has been the target of U.S. investigators. The $4 billion money-laundering operation was first reported by the Bureau of Investigative Journalism and the Guardian newspaper.
The ring has connections to the Gupta family and South African President Jacob Zuma. The Gupta family has been accused of bribery, money laundering and political patronage. The Guptas are of Indiana-South African heritage.
An investigation by HSBC found a $4.2 billion ring that included more than 50,000 transactions in its system. The bank couldn’t follow the money as the Gupta money, about $12.2 million, was mixed with other non-Gupta payments, according to an internal report.
While the bank found the ring, investigators noted the operation did not extend to a larger money laundering network control by the Guptas.
Some of the accounts connected to the ring were not closed but were forwarded to further investigation by the bank, according to the report.
That is of note because in 2012 HSBC officials pledged to clean up its operations after the U.S. government handed down a record fine of $1.2 billion. U.S. officials said the fine was related to an investigation into drug trafficking and money laundering for the sale of drugs in the U.S.
As part of the deal, HSBC promised to strengthen its compliance and procedures.
HSBC was also fined $765 million in the housing mortgage crisis of 2018, according to media reports. In 2016, U.S. investigators accused two HSBC officials of a billion-dollar currency rigging market.