The Facebook-created digital currency Libra has unveiled HSBC legal chief and former George W Bush-era terrorism finance tsar Stuart Levey as its first chief executive.
Mr Levey, who as US under-secretary for terrorism and financial intelligence in the mid-2000s was credited with helping to bring Iran to the negotiating table on nuclear power, has headed HSBC’s legal team for the past eight years. He will start his new job in July, based in Washington DC, the Libra Association announced on Wednesday.
A key challenge he will face will be convincing regulators and politicians that the digital currency project will not become a haven for drug dealers and money launderers.
“One of the things I intend to do when I start at the Libra Association is to review in detail the current plans that are in place . . . for financial crime compliance, and frankly, all of the other critical controls,” Mr Levey said in an interview with the Financial Times, citing the management of the reserve that will back Libra’s coins, as well as privacy protections for users.
His appointment is an important step in Libra’s bid to operate independently from Facebook, whose initial stewardship of the project heightened concerns from global watchdogs, central banks and politicians over the proposed currency’s potential to be used for illicit purposes.
The backlash has already prompted several original members of the association, including Visa, Mastercard and PayPal, to pull out of the project and has seen Facebook chief executive Mark Zuckerberg face a bruising hearing in Congress.
Mr Levey is best known for tough enforcement of Bush-era financial sanctions on Iran, which cut off the country’s financial system and forced it to begin engaging with the west on its nuclear programme. He was viewed as so effective that the Obama administration asked him to stay on, making him one of the few political appointees to serve both Democratic and Republican presidents.
News of the appointment comes just weeks after Libra announced plans to shrink the scope of its initial vision in separate efforts to reassure regulators that it will not become a hotbed for criminal activity.
The 24-member association will now maintain centralised oversight of the developers that build on the network, forgoing earlier plans to move to a “permissionless” system that participants could join without vetting. It will also set up a “financial intelligence unit”, it said.
Non-profit Libra has formally initiated the process of applying for a licence with the Financial Markets Supervisory Authority in Switzerland, where it is based. But Mr Levey said he knows “from experience how important it is to have the support of the US in any global financial endeavour. That will be an important priority.” Mr Zuckerberg last year said the project will aim to garner backing from US regulators ahead of its launch.
Mr Levey added that the coronavirus pandemic, while presenting some challenges, also “highlights the need” for a low-cost, borderless global digital currency like Libra. “If you’re living off of remittances, you know, a six and a half per cent fee to send money to your family — that’s painful and it is something we ought to be able to change.”
Stuart Gulliver, the former chief executive of HSBC, described Mr Levey as “the most important key hire” he made during his seven years running the bank from 2011, as the company grappled with a litany of compliance issues.
Henry Paulson, the former US Treasury secretary and chief executive of Goldman Sachs, said: “The fact that Stuart is an expert at countering abuses of our financial system by terrorists [and] money launderers . . . gives me confidence that this digital currency is highly likely to set a standard for safety.”
HSBC chief executive Noel Quinn told staff he had “mixed emotions” about Mr Levey’s departure. “He has guided us through many legal and reputational challenges, has skilfully helped us navigate the closure of many of our legacy issues, and has partnered with the businesses in executing our strategy,” Mr Quinn wrote in an internal memo.
Richard Gray, currently HSBC’s global general counsel, will act as interim chief legal officer from July 1 while the bank carries out a search for Mr Levey’s permanent successor.
Separately on Wednesday, Facebook named the first 20 members of its new “Supreme Court”-style appeals body that will adjudicate challenges to decisions made by its content moderators.
These included figures from across the political spectrum — such as former Guardian newspaper editor Alan Rusbridger and John Samples, vice-president of libertarian think-tank the Cato Institute — as the social media platform seeks to cast off claims of political bias and censorship, and prove it can self regulate as global watchdogs circle.
This article has been amended since publication to clarify that the Libra Association is not a foundation.