By Mica Rosenberg
NEW YORK, July 21 (Reuters) - The U.S. government asked afederal appeals court on Thursday to block the release of areport detailing how HSBC Holdings Plc is working toimprove its money laundering controls after the British bank wasfined $1.92 billion.
In a brief filed with the 2nd U.S. Circuit Court of Appeals,the U.S. Department of Justice sought to overturn an orderissued earlier this year by U.S. District Judge John Gleeson tomake a report by the bank's outside monitor public.
"Public disclosure of the monitor's report, even in redactedform, would hinder the monitor's ability to supervise HSBC," thegovernment's court filing said, adding that bank employees wouldbe less likely to cooperate with the monitor if they knew theirinteractions could be released.
A spokesman for the Justice Department declined to comment.HSBC did not immediately respond to a request for comment.
The filing comes a week after U.S. congressionalinvestigators criticized senior officials at the Department ofJustice for overruling internal recommendations to criminallyprosecute HSBC for money-laundering violations.
Instead, the government in 2012 fined HSBC and entered intoa five-year deferred prosecution agreement that stipulated allcharges would be dropped if the bank agreed to install anindependent monitor to help improve compliance.
In the 2012 settlement, HSBC admitted to violating U.S.sanctions laws and failing to stop Mexican and Colombian cartelsfrom laundering hundreds of millions of dollars in drug proceedsthrough the bank.
HSBC agreed to monitoring by former New York prosecutorMichael Cherkasky, now the executive chairman of the compliancecompany Exiger. One of the bank's mortgage customers filed amotion to unseal Cherkasky's report to find out whether the bankcontinued to engage in what the customer claimed were unsafebusiness practices.
The Justice Department in its brief frequently cited a 2016decision by a U.S. appeals court to uphold a deferredprosecution agreement with Fokker Services, a Dutch companyaccused of illegally shipping aircraft parts to Iran and othercountries. The appeals court ruled that a Washington-basedDistrict Court judge lacked the authority to reject an agreementreached by U.S. prosecutors and the company.
In an earlier court filing, the government said that whileHSBC has made significant progress since the agreement, it isstill not doing enough to thwart money laundering.
The case is U.S. v. HSBC Bank USA NA et al, 2nd U.S. CircuitCourt of Appeals, No. 16-308 (Reporting by Mica Rosenberg; Editing by Leslie Adler)