Weeks after a US Senate panel investigation accused HSBC of exposing the American and Indian financial systems to terrorist financing, money laundering and drug trafficking activities due to poor risk control systems, the Indian government has reportedly given the bank’s Indian employees a clean chit as none of its activities raised alarm bells from India’s point of view.
HSBC’s staff in India had come under the scanner for deficiencies in their role as “offshore reviewers” of the global banking giant’s compliance with laws to prevent money laundering and terrorist financing.Deficiencies were found in the quality of the work done by offshore reviewers who were used for clearing a major backlog of suspected transaction alerts at the bank.
Authorities in the Indian financial sector had earlier started gathering all possible details about the bank and any possible lapse in their compliance with regulations.
However, a DNA report today said the government has cleared the bank’s Indian staff after a preliminary report from the Financial Investigation Unit and the Reserve Bank of India. “On random checking, we have not found undue clearances of suspected transaction alerts. As far as quality of work and inadequate staff strength in HSBC’s Anti-Money Laundering Compliance Department is concerned, it has nothing to do with us and is between the US authorities and the bank,” DNA reported, quoting RBI sources.
Last week, the income-tax department too began assessment proceedings in ‘cases related to HSBC accounts’.