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HSBC sets up financial crime compliance unit

Source: Thomson Reuters Foundation - Mon, 10 Dec 2012 15:52 GMT
Author: Reuters
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    * Bob Werner to head financial crime compliance

   * HSBC separates financial crime from other compliance

   * HSBC expected to be hit with $1.8 bln fine this week

   * Shares down 0.3 percent

(Adds details)

   LONDON, Dec 10 (Reuters) - HSBC <HSBA.L> has promoted a former U.S. official who headed sanctions action against drugs traffickers and money launderers to be its head of financial crime compliance, a new role.

   Europe's biggest bank, expected to be fined $1.8 billion this week as part of a settlement with U.S. agencies over money-laundering lapses, named Bob Werner as head of group financial crime compliance and group money laundering reporting officer.

   HSBC also said on Monday it was separating financial crime compliance from other areas of compliance, and will set up a financial intelligence unit to carry out in-house investigations into potential regulatory breaches.

   In July, a U.S. Senate report criticised HSBC for letting clients shift potentially illicit funds from the Cayman Islands, Iran, Mexico, Saudi Arabia and Syria. Last month, HSBC set aside $1.5 billion to cover the potential fine.

   Chief Executive Stuart Gulliver said the issue had been shameful and embarrassing and caused "considerable reputational damage".

   The U.S. fine relates to breaches of anti-money laundering controls in Mexico and other violations, sources said.

   Werner will be responsible for strategy, standards and systems in anti-money laundering, counter-terrorist financing, proliferation funding, anti-bribery and sanctions.

   He joined HSBC in August and was previously head of the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) and Financial Crimes Enforcement Network (FINCEN). After that, he worked at Goldman Sachs <GS.N> and Bank of America Merrill Lynch <BAC.N> in compliance and business intelligence.

   As a group general manager, Werner will be one of about 40 senior executives responsible for the strategic direction and day-to-day operations of the bank.

   Gulliver is simplifying HSBC's reporting lines and has recruited other senior U.S. officials for key roles, including Stuart Levey, a former undersecretary for terrorism and financial intelligence in the U.S. Treasury who joined as chief legal officer in January.

(Reporting by Steve Slater; Editing by Dan Lalor and Greg Mahlich)

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