LONDON (Reuters) - Governments worldwide should pass new laws to facilitate the sharing of information between themselves and the private sector in order to better combat financial crime, HSBC's top lawyer told a banking conference in Geneva on Monday.
"Put simply, the way we do financial crime compliance is outdated," Stuart Levey, chief legal officer at HSBC (L:HSBA) told the annual Sibos financial conference.
Levey, who was under secretary for terrorism and financial intelligence at the U.S. treasury department from 2004 to 2011, called on the inter-governmental Financial Action Task Force (FATF) to set far-reaching global standards to help banks share information with governments and vice-versa.
National secrecy and privacy laws often prevent such sharing, Levey said, hindering cross-border efforts to stop illicit money flows.
"...data privacy and bank secrecy restrictions are increasingly tough in a number of countries," Levey said, without naming which countries he was referring to.
HSBC is among a number of major European banks fined and criticized in recent years by U.S. authorities for failing to adequately prevent money laundering.
The bank paid $1.9 billion as part of a global settlement in 2012 for failing to stop drug cartels from pumping at least $800 million through the bank.
HSBC has since stepped up efforts to improve its own controls, including hiring the U.S. Treasury's top anti-money laundering official Jennifer Shasky Calvery in April to lead a new Financial Crime Threat Mitigation team at the bank.
Levey said all countries should create information-sharing authorities similar to that which exist in the United States under the PATRIOT act and in Britain via the Joint Money Laundering Intelligence Task Force, established by Prime Minister Theresa May when she was Home Secretary.
Levey said failure to promote better solutions would lead to the worsening of the current problem whereby banks exit riskier business areas for fear of financial penalties, excluding some legitimate businesses such as charities from the system.