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Mexico fines HSBC for lax money-laundering controls


MEXICO CITY (Reuters)—HSBC has been fined $27.5 million in Mexico for lax controls in its anti-money laundering systems, a week after a scathing U.S. Senate report slammed the bank for letting clients shift funds from dangerous and secretive countries.

Mexico's National Banking and Securities Commission levied the fine against HSBC, Europe's biggest bank, due to its "non-compliance with anti-money laundering systems and controls" as well as its late reporting of 1,729 unusual transactions, failing to report 39 unusual transactions, and 21 administrative failures.

It is the biggest fine ever charged against a bank by the CNBV, the Mexican regulator said.

The Mexican fine is separate from any settlement the bank might reach with the U.S. Department of Justice.

That could run to as much as $1 billion, analysts have estimated, based on a record $619 million fine that ING agreed in June to pay to settle similar claims.

Last week, a U.S. Senate panel alleged that HSBC acted as a financier to clients routing funds from the world's most dangerous places, including Mexico, Iran and Syria, doing regular business in areas tied to drug cartels, terrorist funding and tax cheats.

The report slammed a "pervasively polluted" culture at the bank and said between 2007 and 2008, HSBC's Mexican operations moved $7 billion into the bank's U.S. operations.

HSBC ignored risks in doing business in countries like Mexico, where drug trafficking is rife, the report said.

In a statement, the bank said, "HSBC Mexico apologizes for its failure strictly to comply with banking regulations, and acknowledges that in the past, it has sometimes failed to meet the standards that regulators and customers expect."

It said it had taken action to address the failures and noted that Mexico remained a priority market.

HSBC is one of Mexico's top five banks, with more than 1,400 branches and 6 million customers. It has operated there since the 1970s. In 2000, HSBC bulked up after buying Republic National Bank and did so again in 2002 with a controlling stake in Grupo Financiero Bital.

The problems at Europe's biggest bank have been known for nearly a decade, but the Senate probe detailed just how sweeping the problems have been.

The fine comes at a troubled time for Britain's banks, after rival Barclays was fined $453 million by U.S. and U.K. regulators last month for manipulating interest rates. More banks around the world are expected to be fined as part of the probe into Libor.

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