South Korea’s financial regulator will carry out spot checks this month on the local operations of Standard Chartered and HSBC Holdings over money laundering allegations against the lenders in other countries.
The Financial Supervisory Service (FSS) said in a statement on Thursday it would conduct the local checks after allegations were made against the two British banks in the United States and Mexico. It did not specify when the checks would take place, though an FSS official told Reuters they were likely later this month.
The regulator noted that HSBC’s Mexican unit was fined last month after failing to report suspicious financial transactions related to the drugs trade, and the bank’s US unit is reportedly under investigation over money laundering allegations. The FSS also noted Standard Chartered’s New York branch is being investigated over deals tied to Iran.
The FSS official, who declined to be named, said the regulator would likely conduct the checks late this month after reviewing documents to see whether the banks’ Korean units had been involved in similar activities.
“The inspection will focus on whether these banks have reported (to regulators) any dubious transactions including those with countries subject to financial transaction sanctions and whether they took their responsibility of checking customers (identification),” the FSS statement said.
Park Chong-hoon, head of corporate affairs at Standard Chartered’s Korean unit, said the bank was in regular contact with local regulators and “will cooperate fully with the FSS.” Standard Chartered has strongly rejected the portrayal of facts in an order issued by New York’s bank regulator this week which accused the bank of violating US sanctions against Iran.
Chung Chi-hyang, spokeswoman for HSBC’s Korean unit, said the bank would “provide all the information FSS is requesting on a timely basis and give any other support they need.”
In July, HSBC set aside $700 million to cover fines and other costs after a US Senate report criticised it for letting clients shift funds from dangerous and secretive countries, notably Mexico.
Elsewhere in Asia, the Reserve Bank of India said it doesn’t comment on issues involving individual banks – both HSBC and Standard Chartered have big offshore centers in India providing global support operations – and the Australian Prudential Regulation Authority (APRA) said it was “not able to discuss any entities that we regulate.”
Standard Chartered shares listed in Hong Kong rose 4.3 percent on Thursday, while HSBC gained 1.3 percent.