Thu, Feb 27, 2014

http://www.reuters.com/article/2014/02/26/us-hsbc-moneylaundering-idUSBREA1P23D20140226

(Reuters) - HSBC Holdings has named a former agent of the Department of Homeland Security and expert on high-risk clients to head a U.S. anti-money laundering operation being revamped after the bank paid a record fine over compliance lapses.

Daniel Wager, who helped investigate HSBC for the federal agency, joined the HSBC's anti-money laundering team last November as a senior vice-president. He assumed his new post this week, a spokesman for the bank told Compliance Complete.

Wager has gained prominence as an authority on anti money-laundering (AML) issues. Before joining HSBC he headed TD Bank Group's global enhanced due diligence unit, overseeing the handling of high-risk clients. In his new role at HSBC's U.S. unit, Wager is to oversee AML compliance across all business lines.

Prior to entering the private sector in August 2011, Wager was a supervisory special agent with Homeland Security's investigations arm and led a New York-based, multi-agency financial intelligence unit.

Among other things, Wager played a role in probing AML lapses at HSBC, sources familiar with his background said.

In December 2012, the bank paid to U.S. authorities what was then a record fine of $1.9 billion to resolve charges that it failed to stop hundreds of millions of dollars in drug money from flowing through the bank from Mexico, and promised at the time to fix AML lapses.

The U.S. government has led a crackdown on financial institutions that fail to adequately guard against improper transactions.

Despite a number of high-profile hires, HSBC has struggled to convince U.S. regulators that the AML controls surrounding correspondent banking, one of its riskiest and most profitable lines of business, are in order.

Two top legal officials at HSBC's U.S. arm, anti-money laundering director Alan Schienberg and chief compliance officer Gary Peterson, left in November amid HSBC's compliance overhaul.

HSBC recently hired former JPMorgan executive Jessica Gomel in a new position, global head of financial crime compliance for correspondent banking, to try to bolster its ability to police currency clearing and other activity. Wager is positioned to support that effort, the sources said.

As part of a restructuring that relies on regional heads of "financial crimes compliance" to police transactions, HSBC last month hired former Bank of America executive Patty O'Connor to be its U.S. regional head.

Wager will report to O'Connor as well as Peter Hazlewood, HSBC's London-based global head of AML.

(This article was produced by the Compliance Complete service of Thomson Reuters Accelus (accelus.thomsonreuters.com).

Compliance Complete provides regulatory news, analysis, rules and developments, with global coverage of more than 400 regulators and exchanges.)

(Editing by Randall Mikkelsen, Bernard Orr)