HSBC Holdings Plc’s (HSBA) head of group compliance, David Bagley, told a U.S. Senate hearing he will step down as lawmakers probe whether the bank broke anti-money laundering rules.
Executives at Europe’s biggest bank are being questioned by the Senate’s Permanent Subcommittee on Investigations over claims that bank affiliates gave terrorists, drug cartels and criminals a portal into the U.S. financial system by failing to guard against money laundering.
The hearing follows the panel’s 335-page report describing a decade of compliance failures. HSBC enabled drug lords to launder money in Mexico, did business with firms linked to terrorism and concealed transactions that bypassed U.S. sanctions against Iran, Senate investigators said in the report.
“As I have thought about the structural transformation of the bank’s compliance function, I recommended to the group that now is the appropriate time for me and for the bank for someone new to serve as the head of group compliance,” Bagley said. “I have agreed to work with the bank’s senior management toward an orderly transition of this important role.”
Bagley has been the London-based bank’s compliance chief since 2002. He joined Midland Bank in 1992, the year the British lender was acquired by HSBC. Patrick Humphris, a spokesman for the bank in London, declined to comment further.
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