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The Morning Risk Report: HSBC Defends Cooperation With U.S. Prosecutors in Huawei Case
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HSBC said it didn’t set a trap for Huawei to break U.S. sanctions, as a Chinese newspaper claimed. PHOTO: JAYNE RUSSELL/ZUMA PRESS
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Good morning. HSBC Holdings issued a statement defending its cooperation with U.S. prosecutors in a case against China’s Huawei Technologies after Chinese state media said the bank had set up Huawei. HSBC said the U.S. Justice Department made formal requests for information about Huawei, a former HSBC client, and that it didn’t “set a trap” for Huawei to break U.S. sanctions, as Chinese newspaper People’s Daily wrote in an article Friday. The statement comes amid intensifying U.S.-China tensions over trade, Hong Kong and Huawei that have put HSBC in the crosshairs as an Asia-focused trade bank with a large U.S. operation.
In the statement, first released on Chinese social media and geared toward a local audience, HSBC said it wasn’t involved in the Justice Department’s decision to investigate Huawei or to arrest Huawei finance chief Meng Wanzhou and doesn’t have any hostility to the company. It said it relies on communities understanding that international banks must follow international rules, and that they should consider “the values and contributions of their services provided to international customers and local markets.”
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The bank, based in London but with most of its revenue coming from Hong Kong and China, has been under pressure from Chinese state media for more than a year for having handed over documents in the Huawei case. At the time, in 2016, HSBC was being monitored by the Justice Department as part of a 2012 settlement over sanctions breaches and money laundering. Huawei lawyers alleged this year in Canada that the DOJ’s grip on the bank gave HSBC a motive to present Huawei as the mastermind of its sanctions violations. HSBC denies that.
The U.S. has sought to ban Huawei from its own and other countries’ telecommunications networks and is seeking the extradition from Canada of Ms. Meng for allegedly misleading banks about ties between Huawei and an affiliated company in Iran. The banks, which included HSBC, cleared hundreds of millions of dollars in transactions that potentially violated international sanctions, the U.S. alleges. Ms. Meng and Huawei have denied any wrongdoing. HSBC isn’t a party in that case.
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From Risk & Compliance Journal
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Banks May Provide Safekeeping of Cryptocurrency, OCC Says
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National banks and federal savings associations in the U.S. can provide cryptocurrency custody services for customers, a federal banking regulator said in a guidance letter intended to clarify the role of traditional financial institutions in the virtual-assets market. The Office of the Comptroller of the Currency said in an interpretive letter last week that national banks and federal savings associations are authorized to provide the services, including holding unique encoded keys associated with digital currencies, for clients.
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Goldman and Malaysia reached a settlement to resolve claims related to bond transactions the bank helped put together for 1MDB. PHOTO: OLIVIA HARRIS/REUTERS
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Goldman Sachs will pay $2.5 billion to the government of Malaysia for its role in the alleged theft of billions of dollars from a government investment fund, bringing the Wall Street bank close to ending one of the worst scandals in its history. Goldman also guaranteed the recovery of $1.4 billion in assets allegedly stolen from the fund, according to the agreement announced separately by the bank and Malaysia’s Finance Ministry.
Goldman was the main banker for the Malaysian fund, 1Malaysia Development Bhd., or 1MDB. The bank raised billions of dollars for the fund, much of which was allegedly stolen by people who worked for the fund, government officials and two senior Goldman bankers. The deal ends a yearslong tussle between one of the world’s most powerful investment banks and the Southeast Asian nation.
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Democratic Sen. Richard Durbin is asking the Federal Reserve to probe allegedly anticompetitive practices that are forcing merchants to pay excessive debit-card fees levied during the coronavirus crisis by large networks like Visa and Mastercard.
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The Trump administration relaxed export restrictions on specific types of unmanned aerial systems, commonly known as drones, enabling U.S. defense contractors to sell more of their wares abroad. The policy change will allow the transfer of armed systems such as the Predator and Reaper to foreign governments.
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Former Bridgewater Associates co-chief executive Eileen Murray filed suit against the world’s largest hedge fund, alleging Bridgewater is withholding an estimated $20 million to $100 million in deferred compensation because she disclosed her gender-discrimination dispute to a third party.
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The Federal Deposit Insurance Corp. said it was easing lenders’ ability to hire individuals convicted of offenses such as shoplifting in a bid to expand the pool of potential employees in the financial industry. The changes expand the types of offenses for which a waiver is no longer necessary, including small-dollar crimes involving less than $1,000.
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TikTok is owned by Beijing-based ByteDance. PHOTO: RICHARD B. LEVINE/ZUMA PRESS
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The Trump administration’s efforts to thwart a perceived security threat from video-sharing app TikTok faces challenges beyond those it faced when taking on other Chinese-owned businesses such as Huawei Technologies, in part because the U.S. has never blacklisted a wildly popular app. U.S. officials say they are concerned that TikTok, owned by Beijing-based ByteDance, could pass on the data it collects from Americans streaming videos to China’s authoritarian government. TikTok has said it would never do so.
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A political-risk consultant funded by China pleaded guilty in federal court in Washington to tapping U.S. government employees for sensitive information, the latest in a flurry of criminal cases accusing Chinese authorities of directing illegal activities in the U.S.
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Many of the thousands of county and local election officials who will be administering November’s presidential election are running email systems that could leave them vulnerable to online attacks, a new report has found.
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A coronavirus antibody testing site in San Dimas, Calif., outside Los Angeles. California is one of the worst-hit states. PHOTO: ROBYN BECK/AGENCE FRANCE-PRESSE/GETTY IMAGES
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New coronavirus cases continued to surge in the U.S. and other parts of the world over the weekend, as total global infections surpassed 16 million and American officials urged residents to comply with orders made to slow the virus’s spread.
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Republicans are set to release their proposal for the next coronavirus relief bill today, with millions of Americans on the verge of losing expanded unemployment benefits. President Trump’s top economic advisers say they still expect a rapid economic recovery despite surges in new coronavirus infections that have rattled consumers and led to new limits on business activity.
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Public authorities in Spain announced new measures to slow the spread of the new coronavirus as the number of cases continued to rise after weeks of relatively low infection rates.
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Chef Robotics CEO Rajat Bhageria. PHOTO: CAYCE CLIFFORD FOR THE WALL STREET JOURNAL
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Months into a pandemic that rapidly reshaped how companies operate, an increasing number of executives now say that remote work, while necessary for safety much of this year, is not their preferred long-term solution once the coronavirus crisis passes.
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Boeing and Airbus are making planes that airlines aren’t collecting, straining their finances as the coronavirus pandemic wreaks havoc on travel and the aerospace industry. Airlines in many cases say they don’t want the aircraft for now, because they are unable to fill them profitably during a historic plunge in demand for flying. Travel restrictions are also hindering employees of some airlines from getting to the U.S. and Europe to pick up planes from factories.
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McDonald’s says it will require all U.S. customers to wear masks in its stores beginning next month, joining a growing number of businesses introducing mask requirements that go beyond local safety guidelines.
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Schlumberger, the world’s largest oil-field services company, is cutting about 21,000 jobs as oil producers slash spending in response to a historic drop in prices amid the coronavirus pandemic.
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