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Hsbc dpa


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HSBC Deferred Prosecution Agreement

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Hsbc dpa

  2. 2. 2 Deferred Prosecution Agreement A DPA is an agreement between a prosecutor and an organisation which could be prosecuted, under the supervision of judge. The agreement allows a prosecution to be suspended for a defined period provided the organisation meets certain specified conditions. Key Features ★ Enables an organisation to make full reparation for criminal behaviour without the collateral damage of a conviction ★ Avoid lengthy and costly trials ★ Transparent, public events
  3. 3. 3 2003-2006 : HSBC Bank USA was under heavy suspicion by US regulators HSBC DPA 2006-2010: HSBC Bank USA violated several components of the BSA Money laundering risks associated with doing business with certain Mexican customers were ignored.
  4. 4. 4 Money Laundering Money laundering is an illegal process of converting proceeds from illegal activities ( such as drug trafficking, human trafficking, terrorist financing and tax evasion) to a legitimate source of income. Three stages : Placement (Introducing "dirty money" into the financial system ) Layering (Concealing the source of that money by way of a series of complex transactions) Integration (Acquiring that money in claimed legitimate means)
  5. 5. 5 Anti-money laundering (AML) refers to a set of procedures, laws or regulations designed to stop the practice of generating income through illegal actions. AML laws and regulations target activities that include market manipulation, trade of illegal goods, corruption of public funds and evasion of tax, etc. Anti Money Laundering AML (Set of Procedures, laws and regulations) DIRTY MONEY
  6. 6. 6 The Court notes four significant failures: 1. To obtain and maintain due diligence on HSBC Group Affiliates. 2. To adequately monitor over $200 trillion in wire transfers between 2006 and 2009 from customers in nations classified as “standard” or “medium” risk. 3. To provide proper staffing and resources necessary to maintain an effective anti-money laundering program. HSBC Bank Failures
  7. 7. 7 ❏ Profits fell in the first three months of 2016 ❏ Cutting 25,000 jobs ❏ 53 branches are to shut this year, on top of the 78 already closed. ❏ Sold off more than 80 businesses Impacts On HSBC
  8. 8. 8 Consequences ➢ The US government and others would not conduct business with it, which can be humiliating and highly damaging ➢ HSBC would lost its banking licence in the US ➢ Entire banking system can destabilised.
  9. 9. Thank You 9