The U.S. unit of HSBC Holdings PLC is being investigated by federal agencies, including the Justice Department, for possible violations of anti-money-laundering rules and other federal laws, according to a filing with the Securities and Exchange Commission.
HSBC USA Inc. said in the filing that it received grand jury subpoenas and other requests for information from Justice and a U.S. attorney's office. The U.K. bank said it is also "the subject of ongoing examinations" by the Office of the Comptroller of the Currency and the Federal Reserve Bank of Chicago.
HSBC USA said it is being investigated over its compliance with the Bank Secrecy Act and Office of Foreign Assets Control requirements, in addition to its compliance of anti-laundering rules.
A spokesman for HSBC in the U.K. said the investigations relate, among other things, to HSBC's "global banknotes" business, whereby HSBC ships banknotes around the world on behalf of clients, mainly from central banks to major commercial and investment banks.
It also concerns what HSBC describes as its "foreign correspondent" business, which allows businesses to transmit funds to countries where the businesses don't have a banking presence.
The spokesman said a decision had been made to wind down the banknote business, as it was considered noncore. He declined to say whether the decision was connected to the probe, beyond saying that it was an "HSBC decision," as opposed to one imposed on the bank by regulators or other agencies.
"We take these matters seriously and are working with regulators and agencies to resolve this," the spokesman said. "We are committed to high standards of risk management and compliance."
HSBC USA said authorities have the power to impose civil penalties, such as fines and financial penalties, if it is found to have violated the law.
In its SEC filing on Monday, HSBC warned that it is "likely" it will be subject to "formal enforcement action," which could include a cease-and-desist order or other penalties.
"If we are found to have violated the law, relevant authorities have the power to impose civil money penalties, fines and other financial penalties," it added.
