U.S. report slams HSBC's anti-money laundering efforts

A "pervasively polluted" culture at HSBC Holdings Plc allowed the bank to act as financier to clients seeking to route shadowy funds from the world's most dangerous and secretive corners, including Mexico, Iran, the Cayman Islands, Saudi Arabia and Syria, according to a scathing U.S. Senate report issued on Monday.
While the big British bank's problems have been known for nearly a decade, the Senate probe detailed just how sweeping the problems have been, both at the bank and at the Office of the Comptroller of the Currency, a top U.S. bank regulator which the report said failed to properly monitor HSBC.
"The culture at HSBC was pervasively polluted for a long time," said Senator Carl Levin, chairman of the U.S. Senate Permanent Subcommittee on Investigations, a Congressional watchdog panel.
The report comes at a troubling time for a banking industry reeling from a multi-country probe into the manipulation of global benchmark rates. Last month, rival British bank Barclays Plc agreed to pay a $453 million fine to settle a U.S.-U.K. probe into the rigging of the benchmark interest rate known as the London interbank offered rate, or Libor.
The report caps a year-long inquiry that included a review of 1.4 million documents and interviews with 75 HSBC officials and bank regulators. It will be the focus of a hearing on Tuesday at which HSBC and OCC officials are scheduled to testify.
The bank and the regulator are expected to face tough questions at the hearing about how the abuses were allowed to continue, even after the OCC took regulatory action against HSBC in 2010. A Reuters investigation found persistent and troubling lapses in the bank's anti-money laundering compliance since 2010.
In an emailed statement, HSBC said the Senate report had provided "important lessons for the whole industry in seeking to prevent illicit actors entering the global financial system."
The bank said it is spending more money on compliance and has become more coordinated in policing high-risk transactions.
The report also contained strong criticism of the OCC, saying the regulator failed to crack down on the bank despite multiple red flags, allowing money laundering issues "to accumulate into a massive problem.
Thomas Curry, who took over as comptroller less than four months ago, said in a statement on Monday that anti-money laundering compliance "is crucial to our nation's efforts to combat criminal activity and terrorism, and the OCC expects national banks and federal thrifts to have programs in place to effectively comply with these laws."
Curry said the Senate report had made a number of "thoughtful" recommendations, "which we fully embrace."
Among HSBC's problems, the report described the bank's compliance division as unable to battle the suspect money. High turnover of top compliance officials made it difficult for reform to take hold, the report said. Employees were "overwhelmed," by a mounting number of suspect transactions that needed review.
"We're strapped and getting behind in investigations," one bank official wrote in June 2008. By that time, HSBC was cutting costs to offset losses tied to subprime home loans and the brewing financial crisis. In 2010, one disgusted top compliance official threw up his hands and quit after less than a year on the job, according to the report.
Typical of the problems inside the bank were transactions tied to Mexico, a country the report said is "under siege from drug crime, violence and money laundering."
HSBC, according to the report, helped move money for a Mexican foreign-exchange dealer called Casa de Cambio Puebla that served as a hub for laundered proceeds, according to the report.
Between 2005 and 2007, there was a "growing flood" of U.S. dollars moving between the exchange house and HSBC, setting off red flags inside HSBC. Some bankers claimed the transfers were legal. One said the money came from Mexican landscapers working in the United States and routing money back home to their families.
HSBC ultimately closed the account in November 2007 after it received a seizure warrant from the Mexican attorney general seeking money tied to the exchange dealer, the Senate report said.

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(Reporting by Carrick Mollenkamp; Editing by Alwyn Scott and Tim Dobbyn)

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Shell Oil ship slips anchor; incident raises questions about Arctic drilling plan

Shell Oil ship slips anchor; incident raises questions about Arctic drilling plan

One of the ships that Shell Oil plans to use to drill in the Arctic slipped its mooring and drifted close to one of Alaska's Aleutian Islands, the latest in a string of incidents to arise around the controversial project.

The Noble Discoverer was about 175 yards from shore in Unalaska Bay when it slipped its mooring Saturday and drifted towards shore near Dutch Harbor, Coast Guard Petty Officer Sara Francis said.

"There are no reports of injuries, pollution and damage to the Noble Discoverer," she said Sunday night.

The incident raised concerns of a possible grounding near Dutch Harbor, though Francis said there was "no damage to the hull or evidence it ran aground."

The Noble Discoverer, right, which Shell Oil plans to use for Arctic drilling, slipped its mooring Saturday.

The Noble Discoverer is one of roughly two dozen ships that Shell is sending to the Beaufort and Chukchi seas in the Arctic to drill exploration wells in the harshest climate in the world.

Opinion: The stakes are huge
Pete Slaiby, the vice president of Shell Oil in Alaska, told CNN recently the drilling in the arctic would be the "most complex, most difficult wells we've drilled in company history."

Proponents say if Shell finds oil with its Arctic drilling, it could create thousands of jobs; opponents -- Alaska's Inuit Eskimos and environmentalists -- say an oil spill could pollute the waters and damage the economy.

"Our subsistence for the winter, it all comes from the ocean, the fish and whale. It's going to ruin our ocean," 79-year-old Abagail Nashupuq of Point Hope told CNN recently.

Nashupuq has spent her entire life in the small northwest fishing village of Point Hope, which sits about 90 miles from where Shell plans to drill one of its exploratory wells in the Chukchi Sea.

Shell has been forced to postpone drilling, which was scheduled to begin this month, until August by an unexpected thick ice pack.

The delay cuts valuable time from Shell, which is operating under U.S. permits which require to stop drilling in the seas by the end of October.

Questions also were raised in June about the durability of one of Shell's underwater oil spill containment vessels in severe weather, which resulted in the vessel that was headed to one of the drilling sites to be temporarily held at port in Washington.

Opponents, primarily the Inuit and environmentalists, called for a review of the federal air permits that were issued to Shell Oil as part of its drilling plan.

Related story: Nations battle for Arctic oil and natural gas

Greenpeace, which has been leading a campaign against the drilling, issued a statement Sunday that questioned whether Shell could carry out the complicated plan if it was having problems with a ship's mooring.

Shell spokesman Curtis Smith said all indications pointed to the Noble Discoverer slipping anchor in soft ground, drifting only 100 yards toward shore.

"Shell quickly engaged one of its support vessels, the Lauren Foss, which safely towed the Discoverer back to its previous location," he said.

Francis, the petty officer, said the crew of the Noble Discoverer were interviewed.

"They did not feel any indication that the ship grounded," she said.

The Coast Guard plans an inspection of the interior of the ship's hull on Monday, the same day that Shell will use a diver to conduct a secondary inspection of the outer hull.

Smith said the anchor system used in the Arctic offshore drilling is "no way similar to the light anchor used in the harbor scenario."

Still, Slaiby promised a full investigation.

"Even a near miss is unacceptable. While an internal investigation will determine why the Discoverer slipped anchor, we are pleased with the speed and effectiveness of the mitigation measures we had in place," he said.

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CNN's Greg Morrison contributed to this report

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Donald Trump Moderated Debate Losing Attendees

Donald Trump Moderated

The Republican presidential debate moderated by Donald Trump for Newsmax is losing participants quickly, ABC News reported.
Minnesota Congresswoman Michele Bachmann became the latest candidate to opt out of the debate schedule for Dec. 27 in Des Moines, Iowa. A spokeswoman for the candidate declined to elaborate as to why she would not attend the debate.
“We have confirmed that we are not participating,” Bachmann spokeswoman Alice Stewart said to ABC News Thursday.
Bachmann, like many of the other Republican candidates, have been trying to curry favor with the New York billionaire real estate mogul, paying several visits to his offices hoping for an endorsement.
Now she will be joining Mitt Romney, Jon Huntsman, Rick Perry and Ron Paul in not attending the Trump-moderated debate. Newt Gingrich and Rick Santorum are the only confirmed attendees.
Politico reported that Santorum criticized his fellow candidates for meeting up with Trump while at the same time opting out of the debate.
“Many of my opponents jockeyed to be the first to fly up to New York and use Donald Trump for a photo op and no doubt try and secure an endorsement. But when Donald wants to moderate a debate – they refuse to attend. That’s what’s so wrong with politics today – hypocrisy,” Santorum said.
Santorum has been struggling to attract publicity to his campaign and is using the debate opportunity with Gingrich to promote his platform.

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