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Zaher Fallahi, Attorney, CPA; Settlement Agreement between the OFAC and HSBC Holdings plc

posted Dec 11, 2012, 10:11 AM by Zaher Fallahi

Zaher Fallahi, Attorney, CPA; Settlement Agreement between the U.S. Department of the Treasury's Office of Foreign Assets Control and HSBC Holdings plc


The U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) today announced a $375 million settlement with HSBC Holdings plc to settle potential liability on behalf of it and certain of its affiliates (collectively, HSBC Group) for apparent violations of the Iranian Transactions Regulations (ITR), 31 C.F.R. part 560; the Burmese Sanctions Regulations (BSR), 31 C.F.R. part 537; the Sudanese Sanctions Regulations (SSR), 31 C.F.R. part 538; the Cuban Assets Control Regulations (CACR), 31 C.F.R. part 515; and the Libyan Sanctions Regulations (LSR), 31 C.F.R. part 550 (which, were in effect until 2004).  The settlement resolves OFAC’s investigation into HSBC Group’s engagement in payment practices that interfered with the implementation of U.S. economic sanctions by financial institutions in the United States, including its New York subsidiary, HSBC Bank N.A. USA.  Payment practices included the use of SWIFT payment messages in a manner that obscured references implicating U.S. sanctions, removal of information from SWIFT messages, and forwarding of payment messages to U.S. financial institutions that falsely referenced an HSBC Group affiliate as the ordering institution.  As a result, more than 2,300 payments, totaling approximately $430 million were routed through U.S. banks for or on behalf of sanctioned parties in apparent violation of U.S. sanctions.  HSBC Holding plc’s settlement with OFAC is simultaneous with settlements with the Department of Justice's Asset Forfeiture and Money Laundering Section, the New York County District Attorney's Office, and the Federal Reserve Board of Governors with the cooperation of the UK’s Financial Services Authority.  Separately, this settlement also covers ten transactions totaling approximately $21 million in apparent violation of the Burmese, Sudanese, Iranian and Zimbabwe sanctions, which OFAC determined were not egregious.  One of these transactions involved the transfer of 32,000 ounces of gold bullion for the ultimate benefit of the Central Bank of Iran.

For more information on this action, please visit the following web notice or visit the following link for Treasury’s press release on this topic.