HSBC Under strict vigilance

India will probe the transfer of funds by HSBC to an al Qaeda-linked bank in Saudi Arabia as well as its dealings with Bangladesh’s Islami Bank Bangladesh Ltd and Social Islami Bank Ltd, which have long been suspected of funding terrorist groups with India links.

Top officials said besides the RBI overseeing HSBC’s Indian operations, intelligence agencies would also launch investigations based on the US Senate sub-committee’s report on how the bank had become a conduit for money laundering and possible terror financiers.

The 340-page report has sections on how HSBC established links with Saudi Arabia’s Al Rajhi Bank.

 In 2009, HSBC had authorised its Hong Kong branch to buy rupee for the Saudi bank. The report pointed out that the Saudi banks handled International Islamic Relief Organisation’s “charitable contributions intended to benefit suicide bombers by directing al Igatha Journal advertisements… in Somalia, Sri Lanka, India, and the Philippines”.

Al Rajhi has a 37 per cent stake in Islami Bank. Besides this bank, HSBC transferred funds to another Bangladeshi lender with terror links —Social Islami Bank Ltd.

Bangladesh’s home ministry, which under the Awami League government has been cracking down on terror groups, had announced in March 2011 that 8 per cent of Islami Bank’s profits were diverted as zakat, or obligatory donation, to support militant jihad.

Sources said around 12 years back, Indian intelligence agencies had intercepted a letter from Jamaat leaders, which acknowledged money transfers through Jamaat-Bangladesh to the Muslim United Liberation Tigers of Assam (Multa) from Jamaat-Pakistan.

India staff role

HSBC’s staffs in India have come under the scanner for deficiencies in their role as “offshore reviewers” of the global banking giant’s compliance to safety mechanism against money laundering and terrorist financing.

A probe by the US Senate’s Permanent Subcommittee on Investigations found that HSBC’s Anti-Money Laundering Compliance Department, which included employees in India, was highly inadequately staffed, according to PTI.

Courtesy- http://www.telegraphindia.com/1120719/jsp/business/story_15745817.jsp#.UAeGPbUe6ac