An exterior view of the HSBC facility is pictured in New Castle, Delaware on Friday.

NEW YORK: Executives of HSBC Holdings Plc and its U.S. subsidiary are scheduled to testify Tuesday before a Senate panel about how the London-based banking behemoth, after years of run-ins with U.S. authorities over alleged anti-money laundering lapses, has cleaned up its act.

In anticipation of the hearing, HSBC Chief Executive Stuart Gulliver sent a message to employees earlier this week: “Between 2004 and 2010, our anti-money laundering controls should have been stronger and more effective, and we failed to spot and deal with unacceptable behavior,” Gulliver wrote. “It is right that we are held accountable and that we take responsibility for fixing what went wrong.”

Gulliver’s memo implies that the bank’s problems ended in 2010. But a Reuters investigation has found persistent and troubling lapses in the bank’s anti-money laundering compliance since then.

Moreover, the problems arose in the very operation meant to show regulators that the bank could effectively monitor the trillions of dollars flowing annually through its offices in 80 countries and territories.

In a sprawling, low-rise building abutting pasture land in New Castle, Delaware, HSBC’s anti-money laundering staff review customer transactions and so-called alerts generated when the bank’s monitoring systems spot a suspicious transaction. It also housed the “look-back” at thousands of old transactions that the U.S. Comptroller of the Currency ordered in 2010, after citing the bank for multiple anti-money laundering failures.

Former employees in the New Castle office describe a febrile boiler-room environment overseen by managers uninterested in investigating transactions with possible links to drug trafficking, terrorist financing, Iran and other countries under U.S. sanctions, and other illegal activities. Instead, they say, the single-minded focus was on clearing out the paperwork as fast as possible.

“There were multiple backlogs” of alerts, said Everett Stern, who worked in the New Castle building from October 2010 to November 2011. “The name of the game was to close as many as you possibly can.”

Stern was a 26-year-old with a master of business administration degree when he joined HSBC as a compliance officer “to find suspicious activity,” as he put it. Within months, he was named a department specialist in Middle Eastern transactions.

“I’m not an expert” in money laundering in the Middle East, Stern said. His appointment, he said, was symptomatic of larger disregard for investigative rigor in the office. “Anybody who submitted their name for something basically got approved for that specialty.”

Stern said that in the course of his work, he came across many suspicious transactions. Some involved parties he suspected of having ties to Hezbollah and Hamas - Islamist groups that the U.S. considers to be terrorist organizations. When he alerted his superiors to these dealings, he said, his concerns were dismissed.

At one point, Stern said, he decided to take action on transactions linked to Palestine that he and some of his colleagues had noticed.

Stern sent an email to two superiors with the subject line, “Compliance error.” In the email, Stern wrote: “I believe investigators in the department are unknowingly making a major compliance error. Over the last couple of months investigators have approached me about cases in the Middle East, especially in Palestine.… It appears that most investigators do not understand that the government of Palestine is the terrorist organization Hamas.”

One of the bosses, Jeff Kraft, an anti-money laundering compliance manager, came bursting out of his cubicle. “Are you out of your f------ mind?” he said, according to Stern’s recollection. “I should fire you right now.”

Kraft insisted that Hamas was not a terrorist organization and that if government officials saw the email, the New Castle office would be shut down, according to Stern.

Hamas, which governs the Gaza Strip of the Palestinian Territories, has been designated a terrorist organization by the U.S. since 1995.

Kraft could not be reached for comment.

Stern was part of the New Castle operation employing regular HSBC staff to monitor current transactions and tackle a backlog of alerts. A second section comprised a task force - largely staffed with former law-enforcement officials working under contract - that was conducting the look-back the OCC ordered in 2010, investigating transactions up to several years old.

Several of these contractors, echoing Stern, said the effort was more cosmetic than concrete. One said that when an investigator couldn’t track down information on a counterparty to a particular transaction, the investigator was told to close the case even if it seemed suspect.

“I was extremely, extremely disappointed with the ethical part of how they were handling it,” said one former task force contractor. “It was just a factory the way it was handled. There was a lot of pressure to get investigations closed.”

The contractor added: “If Congress and the regulators actually knew what was going on, they would have a fit.”

Another contractor said supervisors “wanted quantity, not quality.”

In response to questions about the work at New Castle, HSBC spokesman Robert Sherman said: “The quality of work in Delaware has been and still is consistent with our high expectations. … We have had and continue to have very high quality control and assurance procedures.” Those procedures, he said, include regular reviews of the New Castle work by senior management and quality-assurance teams. A spokesman for the OCC, which ordered the look-back, declined to comment.

The Daily Sun/Bangladesh/ 15th July 2012

Al-Arafah Islami Bank Limited organised half-yearly managers’ conference at a hotel in Dhaka Saturday.

Badiur Rahman, Chairman of the Bank inaugurated the conference as the chief guest, said a press release.

Ekramul Hoque, Managing Director of the Bank presided.

Alhajj Md. Harun-Ar-Rashid Khan, Alhajj Nazmul Ahsan Khaled and Alhajj Engr. Khondoker Mesbahuddin Ahmed, directors, Md. Rafiqul Islam, Kondoker Nayeemul Kabir, Md. Mofazzel Hossain and Kazi Towhidul Alam, Deputy Managing Directors and other senior executives of the Bank also spoke.

Managers from 94 branches of the Bank participated the conference.

The Daily Sun/Bangladesh/ 15th July 2012

SIRAJGANJ: Bangladesh Bank (BB) Governor Dr Atiur Rahman said the next monetary policy would have a strategy of ensuring credit flow to productive sectors with an aim to tame up the inflation through increasing the supply of essential commodities as per the demand.

“We’ve asked all banks to increase credit flow to productive sectors to minimize inflationary pressures side by side with taking various steps to discourage import of luxurious goods and reduce credit to this sector,” said the BB governor while addressing two separate loan distribution programmes here Saturday.

On July 18, the central bank will announce its half-yearly monetary policy statement for the first six months of the financial year 2012-13 (FY13), he added.

Dr Atiur will announce the policy at a press conference at the central bank’s headquarters in the capital city at around 11 am, official sources said.

The BB will maintain its contractionary monetary policy for the next six months to bring the inflation down to the fiscal target of 7.5 percent from the current double-digit position, a BB official told BSS.

The policy would remain cautious so the credit flow to the private sector maintains its expansion with creating new job opportunity to propel GDP (gross domestic product) growth, which is targeted at 7.20 percent for the FY13.

According to BB, the credit flow to the private sector was 18.22 percent in April. Dr Akhtaruzzaman said the credit flow, which was in line with the neighbouring countries, indicated that the fear of decline in credit flow due to the “restrained” monetary policy proved unfounded.

The Daily Sun/Bangladesh/ 15th July 2012

From left, Samiran Chakraborty, head of research at Standard Chartered Bank Mumbai; Jim McCabe, chief executive officer of StanChart Bangladesh; Mahbubur Rahman, president of International Chamber of Commerce Bangladesh (ICCB); Muhammad A (Rumee) Ali, chairman of BRAC Bank, and Ataur Rahman, ICCB secretary general, attend a workshop on treasury management, organised by ICCB, in Dhaka yesterday.

The private sector is not getting enough credit for working capital as banks are going through a liquidity crisis, the president of International Chamber of Commerce Bangladesh said yesterday.

So it is essential for bankers to learn more about the treasury management for proper utilisation of limited funds, said Mahbubur Rahman.

He spoke at a workshop on treasury management, organised by the chamber and supported by Standard Chartered Bank, at a local hotel in Dhaka. Despite the global recession, the developing Asia's growth in 2011 was recorded at 9.5 percent, he said.

Asia, with a solid global market and a large pool of foreign exchange reserves, has proven to be the shining light in a gloomy and uncertain world economy, according to experts.

"Asia's prospects are likely to be affected by the West. However, it is opined that the rising Asia appears to be able to help save the world from the shrinking economy," according to a statement of the chamber.

In line with Asian economies, Bangladesh's performance has so far been quite resilient to global economic meltdown, Rahman said, adding that the country's macroeconomic performance was better than expected and regionally its performance had been one of the best.

He mentioned that treasury management is the management of cash, fund, currency, bank and financial risk.

"So, it is an imperative tool of finance. It handles actual cash management at companies, and one of its main functions is to establish the optimum cash level so that payments can be made and received as necessary for the proper operation of the company."

Besides, another main function of treasury management is to maintain the liquidity of business, Rahman said.

Without proper liquidity, it is risky for business to operate smoothly and it is also the function of treasury management to minimise the currency risk, he said.

For this, treasury managers touch with currency market of world, he said, adding that the managers analyse the reason of crisis in currency market.

"Sometime this crisis will be benefited for them because they have to pay less to other country for getting their service at cheap rates."

The recent manipulation of London Interbank Offered Rate in UK created panic among the consumer of the banks and "its ultimately spreading all over the world", said Muhammed A (Rumee) Ali, BRAC Bank chairman and vice chairman of Bangladesh Association of Banks.

"Recent change in provisioning requirement by our central bank for the commercial bank may compel banks to draw upon their capital to meet their requirements."

He suggested the central bank to make details study on it. Bangladesh Bank should also have to train its officials for providing exact information, Ali said.

Global economic turbulence led to realignment and changes in global financial architecture, said Jim McCabe, chief executive officer of Standard Chartered Bank.

"StanChart has weathered this storm much better than most of our peers worldwide. This gives us a vantage point in guiding financial innovation in a manner which is sustainable by combining our global capability, deep local knowledge and creativity. Our effort today is towards that end."

The workshop with 60 participants was jointed conducted by Samiran Chakraborty, head of research for Standard Chartered Bank, Mumbai; Alamgir Morshed, head of global markets of Standard Chartered Bank, Bangladesh, and Biswajeet Sengupta, head of financial market sales for Bangladesh and Eastern India.

The Daily Star/Bangladesh/ 15th July 2012

The commerce ministry, in a bid to increase the government's non-tax earnings, has proposed doubling of registration and renewal fees for exporters and importers.

In the new policy, the annual import floor has been raised to Tk 5 lakh from Tk 1 lakh.

The registration and renewal fees corresponding to the import floor have been set at Tk 5,000 and Tk 3,000 respectively, from the existing Tk 3,000 and Tk 1,700.

Currently, the most that can be paid as registration and renewal fees are Tk 23,000 and Tk 17,000 respectively, corresponding to annual imports of above Tk 1 crore.

In the proposed policy, they stand at Tk 60,000 and Tk 30,000 respectively, for annual imports of above Tk 5 crore.

If an importer fails to deposit the renewal fee on time, a fine of 100 to 233 percent in excess of the existing fees, have to be paid.

The registration fee for the indenters has been increased by 45 percent to Tk 40,000, while the renewal fee has been raised by 48 percent to Tk 20,000.

For exports, the proposition has been a 100 percent rise in registration and renewal fees, to Tk 7,000 and Tk 5,000 respectively.

On the list of items banned for imports, old computers, old computer accessories, old electronic appliances, all types of industrial sludge and fertiliser and items produced with sludge, have been added.

While import of air gun ammunition will continue to be barred, with the permission from the home ministry, they can be imported for the purpose of sport and shooting clubs.

There has been a proposition to raise the highest value of essential commodities that could be imported through different customs ports.

Now, essentials worth $15,000 can be brought in through the Teknaf customs; raising that to $50,000 has been recommended.

For other land ports, an increase of $3,000 to $10,000 has been suggested.

A provision has been included for export of turbine imported for generation of electricity once it has been used.

Provision has been made for furnishing certificates of the imports of being melamine-free in case of import of food for human consumption.

The Daily Star/Bangladesh/ 15th July 2012