HSBC, StanChart Shares Decline After Reports of Illicit Activity -- 2nd Update
September 21 2020 - 6:38AM
Dow Jones News
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)
Copyright (c) 2020 Dow Jones & Company, Inc.
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