July 27, 2012 / 4:13 PM / 6 years ago

HSBC an "isolated" case in Mexico: banks' association

MEXICO CITY (Reuters) - The money-laundering scandal that hit HSBC Holdings Plc in Mexico was an isolated case in Latin America’s second-biggest economy, the head of the country’s banks association (ABM) was quoted as saying on Friday.

Residents sit by the Angel of Independence monument near British bank HSBC's headquarters in Mexico City July 17, 2012. REUTERS/Tomas Bravo

Mexico’s National Banking and Securities Commission (CNBV) levied a $27.5 million fine against the British bank after a scathing U.S. Senate report last week slammed HSBC for letting clients shift funds from dangerous and secretive countries.

Mexico is particularly exposed to powerful drug traffickers, whose sales are worth billions of dollars annually.

In an interview with Mexican newspaper El Financiero, ABM President Jaime Ruiz Sacristan said the HSBC case was not a sign of wider problems in the banking sector in Mexico.

“I think we’re making this into a really big deal,” Ruiz Sacristan told the paper. “In Mexico there are 42 institutions, plus the brokerage houses and insurers ... this is a specific isolated case.”

The CNBV censured HSBC for noncompliance with anti-money laundering systems and controls as well as for its late reporting of 1,729 unusual transactions, failing to report 39 unusual transactions, and 21 administrative failures.

The U.S. Senate panel alleged that HSBC acted as a financier to clients routing funds from the world’s most dangerous places, including Mexico, Iran and Syria, doing regular business in areas tied to drug cartels, terrorist funding and tax cheats.

The Senate report slammed a “pervasively polluted” culture at the bank and said between 2007 and 2008, HSBC’s Mexican operations moved $7 billion into the bank’s U.S. unit.

This week HSBC apologized for failing to meet anti-money laundering regulations in Mexico. It did not comment on whether the money had come from drug gangs.

Analysts have said that the shifting tactics criminals use to move illicit funds in Mexico often elude the scope of regulators and prosecutors.

Writing by Dave Graham; editing by Matthew Lewis

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