HSBC at Risk of Drug and Terror Money Laundering Charges

HSBC could face charges of money laundering for terrorists and drug lords in court after a judge considered challenging a $2.3bn (£1.6bn) immunity deal struck with prosecutors.

Judge John Gleeson may reject the 'deferred prosecution deal' struck with the US Justice Department, meaning that the company could be barred from trading in the United States if found guilty.

The financial giant is alleged to have funneled $881 million or £534 million into the financial system from Mexican drug cartels, as well as individuals and terrorist organisations in Iran, Libya, Burma, and Sudan, all countries that are subject to US sanctions.

Gleeson made his name prosecuting organised crime and secured the conviction of Mafia boss John Gotti in 1992, but the Justice Department has challenged his right to strike down the deferred prosecution deal after he delayed making a decision on the arrangement.

When the immunity arrangement was first struck last December it generated outrage, with attorney general Eric Holder claiming that HSBC had become too big to prosecute.

Senator Chuck Grassley said that it was "inexcusable" that the justice department did not bring a prosecution last year. "What I have seen from the department is an inexplicable unwillingness to prosecute and convict those responsible for aiding and abetting drug lords and terrorists. I cannot help but agree with an editorial in the New York Times that 'the government has bought into the notion that too big to fail is too big to jail'," he wrote in a letter to Holder.

Stuart McWilliam, senior campaigner with lobby group Global Witness, said: "News that the DPA hasn't yet been signed off gives the justice department a clear opportunity to reconsider the penalties HSBC should face for its widespread money laundering failures.

"Given that over 35,000 people were brutally slain in Mexico at the hands of drug traffickers while HSBC laundered at least $880m of their money, it's shocking that the current system of sanctions does not include senior executives being held personally responsible for the actions of their institutions. Is HSBC too big to jail?"

In a statement, HSBC said that stringent new measures had been put in place to prevent criminal cash entering the system through their banks

A spokesman said: "For more than two years, our new leadership team in both New York and London has been implementing reforms and new controls, investing in compliance systems and staff, and putting in place the most effective global standards across our network to combat financial crime on a global basis.

"We are focused on taking all necessary steps to fulfill our obligation under the agreements with the US and UK governments, and on implementing effective global standards across HSBC."

However the bank has been forced to begin a fresh investigation into its accounts after campaigners exposed its links to logging companies that have felled acres of pristine rainforest in Borneo.

Television presenter Bill Oddie, who lead the campaign, said: "It's hard to get excited about a limited review of an opaque policy sold to the public as a serious commitment to the world's forests."