A Congressional committee has launched a sharply-worded attack on the role played by the former Attorney General and other senior DoJ officials for overriding internal recommendations to prosecute the bank for AML violations.

Former US Attorney General Eric Holder has been attacked by lawmakers in Congress for his role in overruling internal recommendations to prosecute HSBC for money-laundering breaches amid fears about the stability of the financial system.

In 2013, the Financial Services Committee of the US House of Representatives, led by Jeb Hensarling, a Republican of Texas, started a probe of the DoJ’s decision of November 2012 to form a $1.92 billion settlement with the Hong Kong/London-listed bank.

The congressional report, issued yesterday, said Holder misled Congress about the Justice Department’s reasoning for declining to prosecute the bank. 

Holder and other senior DoJ officials decided against criminal charges for HSBC over the recommendations of prosecutors because they had concerns about financial stability, the report said.

HSBC has reportedly declined to comment on the matter. 

The report highlights how treatment of banks for money laundering and related offenses, such as sanctions breaches, remains a sensitive issue. For example, when the US fined Paris-listed BNP Paribas a total of $8.9 billion in 2014 for various sanctions breaches involving nations such as Sudan and Iran, it led to a row with the French government. Separately, the US has been at loggerheads with Swiss banks, for example, over Swiss bank secrecy laws.

“The committee is releasing this report to shed light on whether DoJ is making prosecutorial decisions based on the size of financial institutions and DoJ’s belief that such prosecutions could negatively impact the economy,” the strongly-worded report said. 

“Notwithstanding Attorney General Holder’s personal demand that HSBC agree to DOJ’s 'take-it-or-leave-it' deferred prosecution agreement deal by November 14, 2012, HSBC appears to have successfully negotiated with DoJ for significant alterations to the deferred prosecution agreement’s terms in the weeks following the Attorney General’s deadline,” it said.

Among other points from the report, the committee said: 

“In its haste to complete its enforcement action against HSBC, DoJ transmitted settlement numbers to HSBC before consulting with Treasury’s Office of Foreign Asset Control to ensure that the settlement amount accurately reflected the full degree of HSBC’s sanctions violations”;

“The involvement of the UK’s Financial Services Authority in the US government’s investigations and enforcement actions relating to HSBC, a British-domiciled institution, appears to have hampered the US government’s investigations and influenced DoJ’s decision not to prosecute HSBC”;

“Attorney General Holder misled Congress concerning DoJ’s reasons for not bringing a criminal prosecution against HSBC"; and

“DoJ to date has failed to produce any records pertaining to its prosecutorial decision making with respect to HSBC or any large financial institution, notwithstanding the Committee’s multiple requests for this information and a congressional subpoena requiring Attorney General Lynch to timely produce these records to the committee.” 

The committee added that current Attorney General Loretta Lynch and Secretary Jack Lew [Treasury secretary] remain "in default on their legal obligation to produce the subpoenaed records to the Committee". It also stated that the Department of Justice and Treasury Department's "longstanding efforts to impede the Committee's investigation may constitute contempt and obstruction of Congress".