HSBC row: India to look at culpability of staff here

“We have to examine if there is any culpability of HSBC India employees in the fund transfers,” said an official.

The Enforcement Directorate is the nodal agency of the Indian government to track money laundering offences with investigation support being provided by the Intelligence Bureau and Financial Intelligence Unit. The RBI said it was looking into the allegations.

HSBC Holdings Plc has assured the US Senate Permanent Subcommittee on Investigation that it has begun changing its polices to block the illegal flow of funds.

The primary conclusion of the panel report is that the UK-headquartered bank allowed suspect entities to open accounts in different countries, including India,to access the US dollar.

HSBC’s top compliance officer David Bagley announced he was stepping down and that the bank will shut businesses in secret havens such as the Cayman Islands,but those offers did not blunt the senators’ allegations that the bank sacrificed propriety for profits.

While the bank had an internal anti-money laundering alert system with a threshold for informing higher officials if it it was breached,the report says much of the compliance was done through fewer than 200 employees,including a subset of “offshore reviewers in India”. A visit by the US government team to India to review the bank’s compliance with anti-money laundering work had found “weak monitoring procedures”.

A key element of the report concerns HSBC’s exposure to Al Rajih Bank of Saudi Arabia,which had been given correspondent banking facilities. The Saudi Arabian bank,the report claims,financed contributions to causes linked to suicide bombers.