Document:

EX-10.2

 Exhibit 10.2 
 UNITED STATES OF AMERICA 
 DEPARTMENT OF THE TREASURY 

COMPTROLLER OF THE CURRENCY 
  

					
	 	 	)	  	
	In the Matter of:	 	)	  	AA-EC-2012-140
	HSBC Bank USA, N.A.	 	)	  	
	McLean, Virginia	 	)	  	
	 	 	)	  	

 CONSENT ORDER 
 The Comptroller of the Currency of the United States of America (“Comptroller”), through his national bank examiners has conducted an examination of HSBC Bank USA, N.A., McLean, Virginia
(“Bank”). The Comptroller has identified certain unsafe or unsound practices related to enterprise-wide compliance. The Comptroller has informed the Bank of the findings resulting from the examination. 

The Bank, by and through its duly elected and acting Board of Directors (“Board”), has executed a “Stipulation and Consent
to the Issuance of a Consent Order,” dated December 11, 2012 (“Stipulation and Consent”), that is accepted by the Comptroller through his duly authorized representative. By this Stipulation and Consent, which is incorporated by
reference, the Bank has consented to the issuance of this Consent Order (“Order”) by the Comptroller. 
 ARTICLE I

 COMPTROLLER’S FINDINGS 
 The Comptroller finds, and the Bank neither admits nor denies, the following: 

  
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 (1) The Bank has a supervisory history of non-compliance with banking laws and regulations,
as well as non-conformance with policies, procedures, and prescribed practices in the compliance area that have occurred over a multi-year period. During the past year, additional deficiencies have surfaced from internal and external reviews that
evidence broad and serious weaknesses in the Bank’s compliance program. The robustness of the compliance program has not kept pace with the bank’s size, complexity, and risk profile. 

(2) The Comptroller’s examination findings establish that the Bank has engaged in unsafe or unsound practices with respect to
enterprise-wide compliance. Specifically, the Bank’s compliance program has historically shown deficiencies in adequate, proactive leadership, risk reporting, and policies and procedures. 

Pursuant to the authority invested in him by the Federal Deposit Insurance Act, as amended, 12 U.S.C. § 1818(b), the Comptroller
hereby ORDERS that: 
 ARTICLE II 
 COMPLIANCE COMMITTEE 
 (1) The Board shall maintain a Compliance Committee
of at least three (3) directors, of which at least two (2) may not be employees or officers of the Bank or any of its subsidiaries or affiliates. In the event of a change of the membership, the name of any new member shall be submitted in
writing to the Deputy Comptroller for Large Bank Supervision (“Deputy Comptroller”) and Examiner-in-Charge of Large Bank Supervision at the Bank (“Examiner-in-Charge”). The Compliance Committee shall be responsible for monitoring
and coordinating the Bank’s adherence to the provisions of this Order. 
 (2) The Compliance Committee shall meet at least
monthly. 

  
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 (3) Within ninety (90) days of this Order and quarterly thereafter, the Compliance
Committee shall submit a written progress report to the Board setting forth in detail: 
  

	 	(a)	a description of the actions needed to achieve full compliance with each Article of this Order; 

 

	 	(b)	actions taken to comply with each Article of this Order; and 

  

	 	(c)	the results and status of those actions. 

 (4) The Board shall forward a copy of the Compliance Committee’s report, with any additional comments by the Board, to the Deputy Comptroller and Examiner-in-Charge within ten (10) days of
receiving such report. 
 ARTICLE III 
 ENTERPRISE-WIDE COMPLIANCE PROGRAM 
 (1) Within ninety (90) days of
the date of this Order, the Board, or a designated committee of the Board, shall adopt, implement, and thereafter ensure adherence to a written enterprise-wide compliance program designed to ensure that the Bank is operating in compliance with
applicable laws, rules, regulations, regulatory guidance, and supervisory findings. This program shall include, but not be limited to: 
  

	 	(a)	written description of the duties, responsibilities, and authority of the chief compliance officer and a requirement that this position be staffed by a qualified
individual; 

  

	 	(b)	written descriptions of the duties, responsibilities, and reporting lines of other compliance management officers and compliance 

  
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 personnel, and requirements that these positions be staffed with qualified personnel;

  

	 	(c)	performance objectives and compensation plans that align with written descriptions of duties and responsibilities of compliance personnel; 

 

	 	(d)	written compliance values statement, to be communicated across the Bank; 

  

	 	(e)	annual written analysis of the products and services offered by the Bank that fully assesses risk presented by applicable laws, rules, regulations, regulatory guidance,
and supervisory findings; 

  

	 	(f)	the preparation of a policies and procedures manual covering applicable laws, rules, regulations, regulatory guidance, and supervisory findings for use by appropriate
Bank personnel in the performance of their duties and responsibilities; 

  

	 	(g)	at least semi-annual review of the written policies and procedures manual to update it, as appropriate, to ensure it remains current; 

 

	 	(h)	a control environment maintained by business lines and risk functions (“second lines of defense”) that ensures compliance with applicable laws, rules,
regulations, regulatory guidance, and supervisory findings; 

  

	 	(i)	integration of compliance risk into the enterprise-wide risk management framework; 

  
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	 	(j)	an audit program that tests compliance with applicable laws, rules, regulations, regulatory guidance, and supervisory findings; 

 

	 	(k)	at least semi-annual independent evaluation of the effectiveness of the enterprise-wide compliance program, including but not limited to management, management
information systems, staffing, and training; 

  

	 	(l)	at least semi-annual independent reporting of the results of the evaluation of the enterprise-wide compliance program to the Board or a committee thereof;

  

	 	(m)	procedures to ensure that exceptions noted in testing and validation reports are corrected and responded to by the appropriate Bank personnel in a timely manner; and

  

	 	(n)	the education and training of all appropriate Bank personnel to ensure their awareness of applicable laws, rules, regulations, regulatory guidance, and Bank policies
and procedure. 

 (2) Upon completion of the program, the Board shall submit the program to the Deputy Comptroller
and the Examiner-in-Charge for prior written determination of no supervisory objection. In the event the Deputy Comptroller recommends changes to the program, the Board shall incorporate those changes into the program. Upon receiving a written
determination of no supervisory objection from the Deputy Comptroller, the Bank shall immediately implement and adhere to the program. 

  
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 ARTICLE IV 
 ENTERPRISE-WIDE COMPLIANCE PROGRAM ACTION PLAN 
 (1) The Board shall
direct management to undertake and complete all steps necessary to correct the circumstances and conditions, as noted in the Bank’s most recent Report of Examination, which prompted the need for the enterprise-wide compliance program required
by this Order. 
 (2) Within ninety (90) days of this Order, the Board shall develop and adopt a written plan that:

  

	 	(a)	explains the specific actions that Bank management will take to achieve full implementation of the enterprise-wide compliance program, under Article III, including
personnel resource requirements and the associated on boarding timeline; 

  

	 	(b)	specifies how the Board will ensure Bank management’s implementation of the plan; and 

 

	 	(c)	sets forth a timetable for the implementation of each action specified in the plan. 

(3) Upon completion of the plan, the Board shall submit the plan to the Deputy Comptroller and Examiner-in-Charge for a prior written
determination of no supervisory objection. Upon receiving a written determination of no supervisory objection from the Deputy Comptroller, the Bank shall immediately implement and adhere to the plan. 

(4) The plan shall be implemented pursuant to the time frames set forth within the plan unless events dictate modifications to the plan.
Where the Board considers 

  
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modifications appropriate, those modifications shall be submitted to the Deputy Comptroller and Examiner-in-Charge for prior written determination of no supervisory objection. Upon receiving a
written determination of no supervisory objection from the Deputy Comptroller, the Bank shall implement and adhere to the revised plan. 
 ARTICLE V 
 OTHER PROVISIONS 

(1) Although this Order requires the Bank to submit certain actions, plans, programs, policies, and procedures for the review or prior
written determination of no supervisory objection by the Deputy Comptroller or the Examiner-in-Charge, the Board has the ultimate responsibility for proper and sound management of the Bank. 

(2) In each instance in this Order in which the Board is required to ensure adherence to, and undertake to perform certain obligations of
the Bank, it is intended to mean that the Board shall: 
  

	 	(a)	authorize and adopt such actions on behalf of the Bank as may be necessary for the Bank to perform its obligations and undertakings under the terms of this Order;

  

	 	(b)	require the timely reporting by Bank management of such actions directed by the Board to be taken under the terms of this Order; 

 

	 	(c)	follow-up on any material non-compliance with such actions in a timely and appropriate manner; and 

 

	 	(d)	require corrective action be taken in a timely manner of any material non-compliance with such actions. 

  
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 (3) If, at any time, the Comptroller deems it appropriate in fulfilling the responsibilities
placed upon him by the several laws of the United States to undertake any action affecting the Bank, nothing in this Order shall in any way inhibit, estop, bar, or otherwise prevent the Comptroller from so doing. 

(4) This Order constitutes a settlement of the cease and desist proceeding against the Bank contemplated by the Comptroller, based on the
unsafe or unsound practices described in the Comptroller’s Findings set forth in Article I of this Order. Provided, however, that nothing in this Order shall prevent the Comptroller from instituting other enforcement actions against the Bank or
any of its institution-affiliated parties, including, without limitation, assessment of civil money penalties, based on the findings set forth in this Order, or any other findings. Nothing herein shall limit or modify the releases provided by the
Stipulation and Consent to the Issuance of a Consent Order for the Assessment of a Civil Money Penalty executed simultaneously with this Order. 
 (5) This Order is and shall become effective upon its execution by the Comptroller, through his authorized representative whose hand appears below. The Order shall remain effective and enforceable, except
to the extent that, and until such time as, any provision of this Order shall be amended, suspended, waived, or terminated in writing by the Comptroller. 
 (6) Any time limitations imposed by this Order shall begin to run from the effective date of this Order, as shown below, unless the Order specifies otherwise. 

(7) The terms and provisions of this Order apply to the Bank and its subsidiaries, even though those subsidiaries are not named as
parties to this Order. 

  
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 (8) This Order is intended to be, and shall be construed to be, a final order issued
pursuant to 12 U.S.C. § 1818(b), and expressly does not form, and may not be construed to form, a contract binding the Comptroller or the United States. Nothing in this Order shall affect any action against the Bank or its
institution-affiliated parties by a bank regulatory agency, the United States Department of Justice, or any other law enforcement agency, to the extent permitted under applicable law. 

(9) The terms of this Order, including this paragraph, are not subject to amendment or modification by any extraneous expression, prior
agreements, or prior arrangements between the parties, whether oral or written. 
 (10) Nothing in the Stipulation and Consent
or this Order, express or implied, shall give to any person or entity, other than the parties hereto, and their successors hereunder, any benefit or any legal or equitable right, remedy or claim under the Stipulation and Consent or this Order.

 (11) The Bank consents to the issuance of this Order before the filing of any notices, or taking of any testimony or
adjudication, and solely for the purpose of settling this matter without a formal proceeding being filed. 
 IT IS SO
ORDERED, this 11th day of December, 2012. 

 

	
	/s/ Sally G. Belshaw
	 Sally G. Belshaw
 Deputy
Comptroller
 Large Bank Supervision

  
 9EX-10.3

 Exhibit 10.3 
 UNITED STATES OF AMERICA 
 DEPARTMENT OF THE TREASURY 

COMPTROLLER OF THE CURRENCY 
  

			
	 	 	)
	In the Matter of:	 	)
		 	)
                            AA-EC-12-112
	HSBC Bank USA, N.A.	 	)
	McLean, Virginia	 	)
		 	)
	 	 	)

 CONSENT ORDER FOR THE 
 ASSESSMENT OF A CIVIL MONEY PENALTY 
 The Comptroller of the Currency of
the United States of America (“Comptroller”), through his national bank examiners and other staff of the Office of the Comptroller of the Currency (“OCC”), has conducted an examination and investigation of the Payments and Cash
Management (“PCM”), Global Banknotes, and foreign correspondent operations of HSBC Bank USA, N.A., McLean, Virginia (“Bank”). The OCC has identified deficiencies in the Bank’s internal controls for these areas as well as in
its overall program for Bank Secrecy Act/anti-money laundering (“BSA/AML”) compliance. These findings were the subject of a Consent Cease and Desist Order issued on October 6, 2010 (“Consent Order”). Upon issuance of the
Consent Order, the OCC deferred a decision with regard to the assessment of a civil money penalty (“CMP”) against the Bank based on deficiencies addressed in the Consent Order, pending additional investigation. 

The Bank, by and through its duly elected and acting Board of Directors (“Board”), has executed a “Stipulation and Consent
to the Issuance of a Consent Order for the Assessment of a Civil Money Penalty,” dated December 11, 2012 (“Stipulation”), that is accepted by the Comptroller. By this Stipulation, which is incorporated by reference, the Bank has
consented to 

 
the issuance of this Consent Order for the Assessment of a Civil Money Penalty (“CMP Order”) by the Comptroller. 

On December 11, 2012, the Bank entered into a Deferred Prosecution Agreement (“DPA”) with the United States Department of
Justice (“DOJ”). In the DPA, the Bank admitted it had violated 31 U.S.C. § 5318(h)(1), which makes it a crime to willfully fail to establish and maintain an effective AML program, and 31 U.S.C. § 5318(i)(1), which makes it a
crime to willfully fail to establish due diligence for foreign correspondent accounts. The Bank further consented to DOJ’s findings in connection with these violations. 
 ARTICLE I 
 COMPTROLLER’S FINDINGS 

The Comptroller finds the following: 
 The Comptroller incorporates the following findings in Article I of the Consent Order: 
 (1) The OCC’s examination findings identified deficiencies in the Bank’s BSA/AML compliance program. These deficiencies resulted in a BSA/AML compliance program violation under 12 U.S.C.
§ 1818(s) and its implementing regulation, 12 C.F.R. § 21.21 (BSA Compliance Program). In addition, the Bank violated 12 C.F.R. § 21.11 (Suspicious Activity Report Filings); and 31 U.S.C. § 5318(i) and its implementing
regulation, 31 C.F.R. § 1010.610 (Correspondent Banking) (formerly 31 C.F.R. § 103.176). 
 The Bank failed to adopt
and implement a compliance program that adequately covers the required BSA/AML program elements, including, in particular, internal controls for customer due diligence, procedures for monitoring suspicious activity, and independent testing. The
Bank's compliance program and its implementation were ineffective, and accompanied by 

  
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aggravating factors, such as highly suspicious activity creating a significant potential for unreported money laundering or terrorist financing. 

Some of the critical deficiencies in the elements of the Bank’s BSA/AML compliance program included the following: 

(A) The Bank excluded from automated BSA/AML monitoring wire transfers initiated by customers domiciled in countries risk rated as
“standard” or “medium,” representing two-thirds of total dollar volume for PCM. While the Bank employed other methods for monitoring wire transactions for customers located in countries risk rated standard or medium, these
alternatives provided limited coverage, were not effective, and did not mitigate the BSA/AML risks posed; 
 (B) During
mid-2006 through mid-2009, the Bank did not perform BSA/AML monitoring for banknote (or “bulk cash”) transactions with Group Entities (defined as the Bank’s foreign affiliates in which the Bank’s parent, HSBC Holdings plc,
London, England (“HSBC Group”), holds a majority interest); 
 (C) The Bank did not collect or maintain customer
due diligence (“CDD”) or enhanced due diligence (“EDD”) information for Group Entities. The Bank transacted extensive wire transfers and purchases of United States bulk cash with Group Entities. The lack of due diligence
information inhibited the Bank's assessment of customer risk and the identification of suspicious activity in Group Entity accounts; 
 (D) The Bank failed to disposition its alerts appropriately or to comply fully with its obligation to report suspicious activity on time. As part of the 2009-10 examination, the OCC cited the Bank
for its backlog of unprocessed alerts. The 

  
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Bank’s subsequent review of the backlogged alerts led it to file a substantial number of late Suspicious Activity Reports (“SARs”) with law enforcement authorities; and 

(E) The Bank did not appropriately designate customers as “high-risk” for purposes of BSA/AML monitoring, even where a
customer’s association with politically-exposed persons (“PEPs”) could have harmed the Bank’s reputation. 

(2) The above violations and failures were the result of a number of factors, including, among others, (i) inadequate staffing
and procedures in the alert investigations unit that resulted in a significant backlog of alerts; (ii) the closure of alerts based on ineffective review; (iii) inadequate monitoring of Group Entities’ correspondent accounts for
purpose and anticipated activity, anti-money laundering record, or consistency between actual and anticipated account activity; (iv) unwarranted reliance on Group Entities’ following HSBC Group BSA/AML policies; (v) inadequate
monitoring of funds transfers; (vi) inadequate procedures to ensure the timely reporting of suspicious activity; (vii) failure to adequately monitor Group Entities’ banknote activity, (viii) inadequate monitoring of correspondent
funds transfer activity; and (ix) inadequate collection and analysis of CDD information, including inadequate monitoring of PEPs. 
 The Comptroller further finds, for purposes of this CMP Order: 
 (3) The Bank has
not fully complied with Article IX (Wire Monitoring) of the Consent Order. In relevant part, the Consent Order required the Bank to fully install, test, and activate a new wire monitoring system within 180 days. The Bank installed and activated a
new wire monitoring system for its PCM unit without adequately testing the system. The Consent Order further required the Bank to conduct validation (gap) testing of the new system after installation. The Bank did not complete this testing within a
reasonable period after installing 

  
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the new system at its PCM unit. These instances of noncompliance exposed the Bank to a material risk of failing to report suspicious activity, including suspicious international wire transfers,
to law enforcement. 
 (4) Pursuant to Article XI (Account/Transaction Activity Review (“Look-Back”)) of the Consent
Order, the Bank retained a consultant to conduct a look-back to review certain account and transaction activity specified by the OCC. The look-back, and the prior review during 2010 of the Bank’s backlog of unprocessed alerts, together resulted
in the Bank’s late-filing 890 SARs addressing suspicious activity in the amount of $6.34 billion. 
 (5) The foregoing
violations of law and noncompliance with the Consent Order meet the requirements for a “Tier II” civil money penalty, pursuant to 12 U.S.C. § 1818(i)(2)(B). The violations of law formed a pattern of misconduct. The BSA/AML compliance
program violation began by January 1, 2007, and continued through 2010. The remaining violations of law lasted for three years or longer. 
 (6) During 2007-10, the Bank benefited from the foregoing violations of law by conserving funds that it should have expended in order to maintain a robust BSA/AML compliance program, as required by law.
In this case, it is necessary to assess a civil money penalty in excess of the benefit amount to promote compliance with statutory and regulatory requirements and deter future misconduct. 

Pursuant to the authority vested in him by the Federal Deposit Insurance Act, as amended, 12 U.S.C. § 1818, the Comptroller hereby
ORDERS that: 

  
 -5-

 ARTICLE II 
 ORDER FOR A CIVIL MONEY PENALTY 
 (1) The Bank shall pay a civil money
penalty of five hundred million dollars ($500,000,000.00) to the United States Treasury upon execution of this CMP Order. 
  

	 	(a)	The Bank shall pay the penalty by wire transfer to the United States Treasury, as instructed by the OCC. 

 

	 	(b)	Upon payment of the penalty, the Bank shall send photocopies of the confirmation of the wire transfer by e-mail and overnight delivery to the Director of Enforcement
and Compliance, Office of the Comptroller of the Currency, 400 Seventh Street SW, Washington, DC 20219. 

 (2)
This CMP Order shall be enforceable to the same extent and in the same manner as an effective and outstanding order that has been issued and has become final pursuant to 12 U.S.C. § 1818(h), (i) (as amended). 

ARTICLE III 

CLOSING 

(1) If, at any time, the Comptroller deems it appropriate in fulfilling the responsibilities placed upon him by the several laws of the
United States to undertake any action affecting the Bank, nothing in this CMP Order shall in any way inhibit, estop, bar, or otherwise prevent the Comptroller from so doing. 
 (2) This CMP Order is and shall become effective upon its execution by the Comptroller, through his authorized representative whose hand appears below. The CMP Order shall remain effective and enforceable
against the Bank and its successors in interest, except to 

  
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the extent that, and until such time as, any provisions of this CMP Order shall have been amended, suspended, waived, or terminated in writing by the Comptroller. 

(3) This CMP Order is intended to be, and shall be construed to be, a final order issued pursuant to 12 U.S.C. § 1818(i)(2), and
expressly does not form, and may not be construed to form, a contract binding the Comptroller or the United States. 
 (4) The
terms of this CMP Order, including this paragraph, are not subject to amendment or modification by any extraneous expression, prior agreements, or prior arrangements between the parties, whether oral or written. 

IT IS SO ORDERED, this 11th day of December, 2012. 

  
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	/s/ Sally G. Belshaw
	 Sally G. Belshaw
 Deputy
Comptroller for Large Bank Supervision Office of the Comptroller of the Currency

  
 -8-

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