HSBC customer was on U.S. list of suspected weapons traffickers

An HSBC customer may have used a credit card to traffic in weapons of mass destruction, the bank said in a securities filing Monday.

The unnamed customer used the HSBC card to make 12 payments between April and June, the bank said in its second-quarter 10-Q report.

The account “was subsequently closed and exited during the second quarter.” It did not say how much the payments were worth; the transactions generated “no measurable gross revenue or net profit,” the filing said.

The account holder was designated under Executive Order 13382, the filing said. That order targets the assets of individuals deemed complicit in the proliferation of weapons of mass destruction; it bans U.S. citizens and companies from doing business with those people.

HSBC has reported a similar problem before. In its 2017 annual report, the bank admitted to clearing a $370,000 payment in the first quarter by someone flagged under Executive Order 13382 before freezing the account in question.

Other banks have had this problem, too. In March 2015, for instance, violations of the order featured prominently in the $1.45 billion fine that Commerzbank was ordered to pay for systemic breaches of sanctions against Iran, Sudan and other terrorist-linked states and individuals.

Still, complying with U.S. sanctions remains an especially sensitive issue for the Hong Kong-based bank and its $180 billion-asset American unit, HSBC USA. In a 2012 settlement with the Treasury Department, HSBC admitted to processing payments for entities based in Iran, Libya and Sudan. The company agreed to pay fines totaling $1.92 billion. It remains subject to a consent order from the Office of the Comptroller of the Currency.

Representatives of HSBC, the Treasury and the OCC declined to comment for this story.

HSBC USA on Monday reported income totaling $269 million for the three months that ended June 30.