FSS to probe British banks due to fear of illicit dealsKorea’s financial watchdog will conduct a probe into the local units of Standard Chartered and HSBC after a complex web of money laundering scandals broke out in the British lenders’ overseas offices, the Financial Supervisory Service said yesterday.
“We will scrutinize whether the Korean offices of the two London-based banks were involved in shady transactions with [individual clients] and countries with which the Korean government has prohibited transactions,” said Jeong Yong-geol, an official at the FSS. “We will also look into whether they have reported suspicious transactions to financial authorities, and whether they have fulfilled their responsibility in terms of conducting background checks on their customers.”
The move comes shortly after overseas offices of the two banks - HSBC Mexico and Standard Chartered U.S. - were embroiled in separate money laundering scandals.
Mexican regulators levied a 379 million peso ($28.8 million) fine on the local subsidiary of HSBC in July for facilitating transactions with drug traffickers and other criminals.
HSBC’s U.S. division also came under the microscope as U.S. authorities found it had provided money and banking services to some lenders in Mexico, Iran and Bangladesh. Some of the banks it aided are believed to have helped fund Al Qaeda and other terrorist groups, according to a report released by the U.S. Senate Permanent Subcommittee on Investigations in July.
The Guardian, a British daily, said the U.S. Department of Justice is looking into allegations that Standard Chartered’s New York office illegally moved $250 billion of Iranian money around the global financial system. Some of the lender’s executives are scheduled to appear before the New York State Department of Financial Services in response to the allegations on Wednesday.
Standard Chartered Group released a statement rejecting the allegations on Monday.
The Seoul divisions of the two British banks said they were baffled by the unexpected news.
“We are in regular dialogue with our local regulators on all relevant matters, and we will cooperate fully with the FSS,” said Park Chong-hoon, head of corporate affairs at Standard Chartered Korea. “We would also like to note that the [Standard Chartered] Group strongly rejects the position, or portrayal of facts, as set out in the order issued by the New York State Department of Financial Services.”
Chung Chi-hyang at HSBC Korea said, “We will provide all the information the FSS is requesting in a timely manner, and we will offer any other support they request.”
By Kim Mi-ju [firstname.lastname@example.org]
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