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(Adds details from filing, HSBC comment, case citation,bylines)
By Jonathan Stempel and Karen Freifeld
NEW YORK, April 1 (Reuters) - HSBC Holdings Plc ismaking progress toward cleaning up its operations, afterreaching a $1.92 billion settlement of charges related to moneylaundering, but has not done enough, the U.S. Department ofJustice said on Wednesday.
The government made its criticisms after reviewing findingsof an independent monitor, Michael Cherkasky, who was appointedin connection with HSBC's so-called deferred prosecutionagreement with U.S. authorities.
That accord let HSBC avoid criminal charges for having, asfederal prosecutors put it, devolved into a "preferred financialinstitution" for money launderers and Mexican and Colombian drugcartels, and handled transactions for customers in Burma, Cuba,Iran, Libya and Sudan, which were all subject to U.S. sanctions.
According to a letter from U.S. Attorney Loretta Lynch inBrooklyn, New York, the government agreed with Cherkasky thatHSBC has acted in "good faith" and "made material progresstoward meeting the most stringent compliance standards imposedto date upon a global financial institution."
But Lynch, who is President Barack Obama's nominee to becomeU.S. Attorney General, also said Cherkasky had found progress insome areas "too slow," especially in improving HSBC's corporateculture and compliance technology.
Lynch pointed to instances where senior bankers interferedwith compliance reviews, reflecting a "combativeness" and "basiclack of cooperativeness," while compliance technology systemssuffered from "fragmentation and a lack of connectivity."
Stuart Levey, HSBC's chief legal officer, in a statementsaid the British bank is continuing to meet all its obligationsunder the deferred prosecution agreement, and that its leaders"are making steady progress toward that objective and appreciatethe monitor's ongoing work."
Cherkasky is a former Manhattan prosecutor who has ledseveral companies, and chaired the New York State Commission onPublic Integrity.
Lynch submitted her letter to U.S. District Judge JohnGleeson in Brooklyn, who approved HSBC's settlement in 2013.
HSBC's deferred prosecution agreement lasts for five years,and prosecutors may indict the bank if it violates the terms.
That prospect surfaced in February, as prosecutors inSwitzerland opened a criminal probe into allegations that HSBC'sSwiss unit may have helped thousands of customers evade taxesand launder money.
In her letter, Lynch said the government "stands ready topursue all available remedies" if HSBC does not adhere to thedeferred prosecution agreement.
The case is U.S. v. HSBC Bank USA NA et al, U.S. DistrictCourt, Eastern District of New York, No. 12-cr-00763. (Reporting by Karen Freifeld and Jonathan Stempel in New York;Editing by Chris Reese)
