Security & Fraud

Huawei Transactions Flagged By HSBC AML Overseer

An overseer at HSBC flagged questionable transactions by Huawei Technologies, leading to the arrest of Huawei Chief Financial Officer Meng Wanzhou, according to a report by The Wall Street Journal.

The overseer was appointed under an agreement between the British bank and U.S. prosecutors, with the purpose of evaluating controls meant to spot money laundering and sanctions violations.

The information was relayed to prosecutors in the Eastern District of New York, and Wanzhou was arrested on Dec. 1 in Vancouver, at the request of American authorities. Wanzhou is the daughter of Ren Zhengfei, Huawei’s founder.

Although HSBC was involved in business with Huawei, it isn’t a part of the federal probe, which involves alleged dealings with Iran, actions which would be in violation of sanctions.

The criminal probe in the dealings between Huawei and Iran was launched in April after the U.S. government served administrative subpoenas involving issues related to sanctions. The Commerce Department and the Treasury Department’s Office of Foreign Assets Control were both involved as well.

The news negatively affected the global markets, and U.S. stocks plunged on Thursday in response to the news. Many are worried that the arrest could increase tensions between China and America. The two countries recently paused an escalating trade war.

In 2012, HSBC said it would pay the United States $1.9 billion, as well as enter into a deferred-prosecution agreement that would last five years. The penalties were over the bank’s failure to notice at least $881 million in drug money laundered through its U.S. locations. The bank also concealed transactions with Iran, Libya and Sudan to evade U.S. sanctions.

The justice department forced the bank to hire consulting firm Exiger, which reported to the government, to make sure the bank made steps to better catch suspicious activity in the future.


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