Regulation

HSBC, Standard Chartered Misled By Huawei

HSBC, Standard Chartered Misled by Huawei

HSBC Holdings and Standard Chartered, the two U.K. banks, have been embroiled in the Huawei Technologies scandal in which Canada arrested the company’s Chief Financial Officer Meng Wanzhou at the request of U.S. authorities, prompting China to warn Canada to release the CFO or face “severe consequences.”

According to a report in The Wall Street Journal, citing people familiar with the matter, HSBC and Standard Chartered were among the banks told by Huawei, the Chinese smartphone maker, that it wasn’t doing business in Iran via a Hong Kong company dubbed Skycom Tech. The Huawei executive was arrested over charges that she misled banks about the company’s dealings with Iran to get around international sanctions. Meng is facing hearings in Vancouver that are slated to reconvene later Monday (Dec. 10) and should reach a decision on bail for the executive.

The paper noted that providing the assurances to HSBC and Standard Chartered was important because the two banks were facing oversight for violating sanctions involving Iran, and that the banks couldn’t risk more missteps in that area. In a statement on Saturday (Dec. 8), the Chinese Foreign Ministry accused Canada of “severely violating the legal, legitimate rights of a Chinese citizen,” reported The WSJ.

To comply with anti-money laundering laws, banks have to collect information on their clients and their businesses and financial activities, as well as engage in additional due diligence and monitoring of clients that are deemed a high risk. HSBC and Standard Chartered are being held up as victims in this case, with the accused Huawei deceiving them.

The court filings in Canada pertaining to Huawei said that at least three other global banks were misled by the Chinese handset maker about the relationship between Huawei and Skycom. Prosecutors in Canada contend that the conspiracy to mislead banks was driven by the need for Huawei to move money out of sanctioned countries via the international banking system, the report stated.

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