* Departures come as bank tries to clean up complianceefforts
* Bank entered deferred prosecution agreement in December2012
* HSBC has long experienced turnover in compliance staff
By Carrick Mollenkamp and Brett Wolf
Nov 4 (Reuters) - Two top legal officials at the U.S. arm ofHBSC Holdings Plc are leaving their roles, a spokesmanand sources said, in the midst of the bank's efforts to cleanitself up after a sweeping U.S. criminal probe intomoney-laundering lapses.
A Senate subcommittee report said in 2012 that high turnoverhas hurt HSBC's years-long effort to bolster its compliance withanti-money-laundering laws in the United States.
But a senior HSBC compliance official said the bank is nowmaking changes so that it can comprehensively assess compliancerisk, a concern that became all the more acute after the banksigned a deferred prosecution agreement with the U.S. Departmentof Justice in 2012. The bank agreed to pay $1.9 billion as partof that deal.
"We have plans to bring on some of the best minds and bestexecutives in the compliance industry," said Robert Werner,global head of financial crime compliance. "Watch this space."
Werner, a former Treasury Department official whospecialized in money laundering and sanctions violations, joinedHSBC last year.
Gary Peterson, chief compliance officer for HSBC's U.S.operations, is leaving the bank, HSBC spokesman Robert Shermansaid in a statement. Peterson, whose departure was firstreported by the Wall Street Journal, was not available forcomment.
Separately, Alan Schienberg, an executive vice president anda director of anti-money-laundering at HSBC, is stepping downand will take on an advisory role, said people familiar with thesituation. Reached at his home, Schienberg declined comment.
Both Peterson and Schienberg were seen as components of thebank's efforts to improve, the Senate Permanent Subcommittee onInvestigations said in its July 2012 report on HSBC's lapses inthe United States. Those lapses spurred investigations by theJustice Department, U.S. Immigration and Customs Enforcement,and the Manhattan district attorney, which culminated in theDecember 2012 deferred-prosecution agreement.
The bank's efforts to fix itself date back to at least April2003, when the Federal Reserve Bank of New York and New Yorkstate bank regulators told HSBC to do a better job of policingsuspicious money flows. The bank hired a tough federalprosecutor to head its anti-money-laundering unit, and installedsystems to monitor its business.
But HSBC also suffered rapid turnover among its compliancestaff in the ensuing years. Between 2005 and 2012, at least ahalf-dozen executives oversaw the bank's anti-money-launderingdivision in the United States. Those changes made "reformsdifficult to implement," the report said.
In 2009, the U.S. Office of the Comptroller of the Currency,a bank regulator, deemed one executive incompetent. In onedramatic move, last year David Bagley, a top HSBC complianceofficial, told a U.S. Senate subcommittee he was stepping down.
The bank is in the initial stages of its review by anindependent monitor, Michael Cherkasky, a former New Yorkprosecutor and Kroll Inc chief executive, according to adocument filed on Sept. 30 in federal court in New York. Some 60experts in dirty-money probes are assisting Cherkasky, whosereview was set to start on Oct. 21, the document said.