By Yifan Wang and Joe Hoppe 
 

Shares of HSBC Holdings PLC and Standard Chartered PLC dropped in Asia and U.K. trading Monday following media reports overnight that the two banks and others moved suspected illicit funds despite red flags about their origins.

The allegations, made by U.S. news outlet BuzzFeed News in collaboration with global news organizations including the International Consortium of Investigative Journalists, are based on leaked documents relating to more than $2 trillion of transactions over the past two decades, mostly between 2011 and 2017.

The documents, known as suspicious activity reports, were filed by banks and other financial firms with the U.S. Treasury Department's Financial Crimes Enforcement Network, or FinCEN, about transactions they believe could be part of financial crimes, such as money laundering.

"We take our responsibility to fight financial crime extremely seriously and have invested substantially in our compliance programs," Standard Chartered told The Wall Street Journal.

HSBC said "all of the information provided by the ICIJ is historical" and predated the U.S. Justice Department's conclusion in 2017 that it had met commitments under a deferred prosecution pact.

That deal, agreed to in 2012, required HSBC to fight money laundering in exchange for putting criminal charges on hold. The bank said it spent years overhauling its ability to fight financial crime. "HSBC is a much safer institution than it was in 2012," it said in a statement.

HSBC shares slid 5.3% to close at HK$29.30. They fell 6.2% to 285.05 pence on the London Stock Exchange. StanChart's stock lost 6.2% to close at HK$34.90, and fell 5.7% in London to 338.8 pence.

"While the details of the FinCEN files highlight potential wrongdoing by the banks over a number of years, including having continued to facilitate suspicious transactions beyond filing the original suspicious activities report, it is not clear to us that this news represents a fresh reason to punish the banks involved or whether this is something that the authorities will have previously dealt with as it was information they already knew about," said U.K. investment group Shore Capital.

Shares of both lenders have been knocked lower in recent weeks amid investor concerns about dim prospects for revenue growth given deteriorating global economies, with China's Global Times newspaper suggesting earlier Monday that HSBC might find its way onto China's unreliable entity list.

FinCEN issued a statement adding that it views the publication of the leaked documents to be a crime itself, and it has reported the publication to the U.S. Department of Justice and the U.S. Department of the Treasury's Office of Inspector General.

 

Write to Yifan Wang at yifan.wang@wsj.com and Joe Hoppe at joseph.hoppe@wsj.com

 

(END) Dow Jones Newswires

September 21, 2020 06:23 ET (10:23 GMT)

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