Richard O Connor +44 (0) 20 7991 6590 WASHINGTON – HSBC Holdings plc (HSBC Group) – a British company based in London – and HSBC Bank USA N.A. (HSBC Bank USA) (together HSBC) – a state-chartered banking company based in McLean, Virginia – have agreed to lose $1.256 billion and reach an agreement with the Department of Justice on the postponement of charges of HSBC`s violation of Secrecy Bank Act (BSA), the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA). According to the Court documents, HSBC Bank USA violated the BSA by avoiding to maintain an effective anti-money laundering program and by conducting due diligence with respect to its foreign correspondent account holders. HSBC Group violated IEEPA and TWEA by conducting illegal transactions on behalf of clients in Cuba, Iran, Libya, Sudan and Burma, all countries that were sanctioned by the Office of Foreign Assets Control (OFAC) at the time of the transactions. The $192.35 million fine against HSBC Switzerland consists of three parts. First, HSBC Switzerland agreed to reimburse $60,600,000 to the IRS, which represents unpaid taxes resulting from HSBC Switzerland`s involvement in the conspiracy. Second, HSBC Switzerland agreed to lose US$71,850,000 to the United States, which represents gross expenses (not profits) earned by the bank on its undeclared accounts between 2000 and 2010. Finally, HSBC Switzerland agreed to pay a fine of $US 59,900,000. This penalty amount takes into account the fact that HSBC Switzerland itself declared its conduct, conducted a thorough internal investigation, provided the tax department with customer identification information and cooperated fully with a number of investigations and prosecutions and took corrective measures to protect itself from the future use of its tax avoidance services. What about prosecution? There are still very few — if any. Whether it is MLROs or senior managers, to my knowledge, there are no criminal prosecutions.

This issue remains unchanged in the banking sector. On January 18, 2018, HSBC Holdings Plc (“HSBC”) entered into a deferred prosecution agreement with the Department of Justice, Criminal Division, Fraud Section (“DOJ”), under which it will pay $101.5 million in criminal penalties and withdrawals to settle two cases of wire fraud less than 18 U.S. C to be solved.

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