HSBC Deferred Prosecution Agreement

1. DEFERRED PROSECUTION AGREEMENT

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
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
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
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
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
❏ 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
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. Thank You
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