Attorney general nominee defends British bank investigation

AP News
Posted: Feb 19, 2015 10:40 PM
Attorney general nominee defends British bank investigation

WASHINGTON (AP) — President Barack Obama's nominee for attorney general is defending her office's handling of a money-laundering investigation involving British bank HSBC, saying the deal carried stern penalties even though no individual executives were prosecuted.

Senate Republicans have delayed a vote on Loretta Lynch's confirmation and said they had more questions, including about a 2012 deal in which HSBC agreed to pay $1.9 billion to resolve the investigation. The Senate Judiciary Committee is expected now to vote next week, though other questions from the committee remain outstanding. Lynch also needs to be confirmed by the entire Senate.

Among the questions posed to Lynch from Sen. Chuck Grassley, the Iowa Republican who heads the committee, are 18 mostly focused on the HSBC investigation. Lynch is currently the U.S. attorney for the Eastern District of New York, the office that brought the case.

The Justice Department accused the bank of helping Mexican drug traffickers and other countries under U.S. suspicion or sanction move money around the world, but as part of the deal, no bank executives were criminally charged. At the time, U.S. officials cited the bank's full cooperation and concern that an indictment of the bank would wreak havoc on the financial system. Outside experts criticized the government for failing to hold individuals accountable.

In written responses received by the committee Thursday, Lynch defended the deal, known as a deferred prosecution agreement, and said it had produced consequences that are "perhaps the most stringent ever imposed on a financial institution."

Those include requirements of strict anti-money laundering and compliance efforts and that the bank pay for and retain an independent monitor to make sure corrective steps are implemented.

"Our prosecution of HSBC resulted in a number of consequences to the individuals who oversaw HSBC's anti-money laundering and sanctions compliance programs during the relevant time period," Lynch wrote.

All HSBC operations worldwide must now follow U.S. anti-money laundering standards, she said, adding, "We could not have accomplished this by obtaining a conviction at trial."


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