Mexico fines HSBC $27.5m for lax money-laundering control

HSBC Mexico said it recognised it had "failed to strictly comply with banking regulations"

Mexican regulators have imposed a fine of $27.5m (£17.7m) on banking giant HSBC for its failure to comply with money-laundering regulations.

The fine comes a week after HSBC's chief compliance officer resigned over allegations that the bank ignored warnings that Mexican drug money was being allowed to pass through the bank.

The fine is the highest ever imposed by Mexican regulators.

It constitutes 51.5% of the 2011 annual profit of HSBC's Mexican subsidiary.

'Drug kingpins'

Mexico's National Banking and Securities Commission (CNBV) said it had imposed the fine against HSBC due to its "non-compliance with anti-money laundering systems and controls".

HSBC Mexico issued a statement acknowledging that it failed to report 39 suspicious transactions and had been late in reporting 1,729 others.

"HSBC Mexico recognises it failed to strictly comply with banking regulations, and with the standards that regulators and clients expect of our institution," it said.

Last week, a United States Senate committee found that HSBC had provided a conduit for "drug kingpins and rogue nations".

HSBC's head of compliance, David Bagley, resigned at the Senate committee hearing.

The US department of justice is conducting a criminal investigation into HSBC's operations.

The fine by the CNBV is separate from any settlement the bank might reach with the US department of justice.