Updated: Tue, 17 Jul 2012 16:29:37 GMT | By CBC News, cbc.ca

HSBC exec resigns amid money laundering probe



HSBC exec resigns amid money laundering probe

A top executive at the world's largest bank said he would step down today after details about rampant money-laundering violations at HSBC came to light.

Executives at HSBC testified in front of U.S. senators on Tuesday after the latter published a report that called the culture at the bank "polluted."

David Bagley, a top compliance officer at the bank since he arrived 2002, said he would step down after the report's damning details were released.

Among the allegations are that weakness at HSBC allowed Mexican drug cartels to launder billions of dollars through its U.S. operation and many other risky transactions.

Senate chair Carl Levin accused HSBC of allowing Mexican drug money into the U.S. by being used as a gateway into the country.

"In an age of international terrorism, drug violence in our streets and on our borders, and organized crime, stopping illicit money flows that support those atrocities is a national security imperative," Levin said.

The report also claimed the bank routinely acted as financier for clients moving money in and out of some of the world's most dangerous nations and suspect economies, including Russia, Iran and Syria.

The report suggested HSBC's American operations helped fund other banks in Saudi Arabia and Bangladesh believed to have helped fund al-Qaeda and other terrorist groups.

Bagley was one of a slew of executives to appear before the Senate permanent subcommittee on investigations on Tuesday.

Current and former executives of HSBC apologized for lax controls but say they weren't fully aware of illicit transactions flowing through the bank. The bank also blamed its affiliates for most of the problem transactions, and pledged to pay closer attention to all aspects of the operation in future

Senators are skeptical that the bank didn't know about problems that persisted for seven years.

With files from The Associated Press

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