Freshfields advises HSBC over $1.9bn money-laundering fine

The magic circle firm acted for HSBC on English law matters in relation to the settlement reached this week with the US Justice Department.

The penalty concerns its alleged violation of the Bank Secrecy Act (BSA), the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA).

London-based global financial services head Michael Raffan and corporate finance chief Barry O’Brien led the Freshfields team.

They worked alongside US firms Cahill Gordon & Reindel and Sullivan & Cromwell, which advised the bank on the US aspects of the settlement.

The Cahill team was headed by New York investigations partner David Kelley, while Manhattan-based criminal defence and investigations head Sam Seymour and high-profile financial institutions partner Rodgin Cohen were at the helm of the Sullivan team.

The Justice Department claimed in a statement that HSBC had violated IEEPA and TWEA by illegally conducting transactions on behalf of customers in Cuba, Iran, Libya, Myanmar and Sudan, all of which were subject at the time of the transactions to sanctions enforced by the Office of Foreign Assets Control.

Loretta Lynch, US attorney for the Eastern District of New York, said the fine represented the largest penalty in any BSA prosecution to date.

Freshfields’ mandate from HSBC follows long-running attempts by the firm to develop its relationship with the bank, with the magic circle outfit gradually winning increased work from the client.

It recently advised HSBC on the $9.4bn sale of its stake in China’s Ping An Insurance Group to Thai conglomerate Charoen Pokphand Group, with Hong Kong corporate partner Teresa Ko leading (5 December 2012).

The firm was also hired by the bank earlier this year in defence of allegations that it and other financial institutions mis-sold interest rate hedging products (2 July 2012).

Other firms with traditionally strong ties to HSBC include Clifford Chance and Norton Rose. Both sit alongside Freshfields on the bank’s recently reviewed global panel alongside Allen & Overy, Linklaters and US trio Cleary Gottlieb Steen & Hamilton, Latham & Watkins and Mayer Brown (6 September 2012).