Yes, I thought they\’d get this wrong

Yesterday, Europe’s largest bank, HSBC, announced that it will pay $1.9 billion (£1.2 billion) to settle allegations that it laundered money for drugs cartels, terrorists and pariah states. During approximately the same period that HSBC failed to check whether the dollars it was shipping from Mexico to the USwere drugs money, 47,000 people died at the hands of Mexican drugs traffickers.

“Fines alone are not going to change banks’ behaviour: the chances of being caught are relatively small and the potential profits from accepting dodgy clients are too big. Fines are seen as a cost of doing business,” said Rosie Sharpe, campaigner at Global Witness.

“Instead, regulators should hold senior bankers legally responsible for their banks’ money laundering performance. At the very least, senior bankers should be prevented from working in the industry, akin to the way in which doctors can be struck off. Bonuses should be clawed back, and, in the most serious cases, senior bankers should face jail,” said Sharpe.

The allegation isn\’t that they laundered money. It\’s that they didn\’t fill in the forms properly to prove that they weren\’t laundering money.

Ritchie agrees that such bankers should be jailed of course.

That\’s the Courageous State for you, go to jail for not filling in the forms.

13 comments on “Yes, I thought they\’d get this wrong

  1. Curious. Would have thought Murph would have wanted to stay well clear of subjects like government regulations & killings in Mexico. What with the allegations of US Government agencies being involved in the illegal export of firearms to Mexico resulting in a lot of those 47,000 deaths.

  2. Yes, compare and contrast with the complete absence of coverage of operation Fast and Furious.

    Had a Republican administration done that, it would have been front page news for months.

  3. I don’t know why anyone would think the “gunwalking” scandal relevant here, but let’s acknowledge that it took the Obama administration two years to put an end to the tactics the ATF had been using since 2006, and get back to the subject in hand.

    To dismiss the charges against HSBC as purely a matter of red tape is somewhat fanciful. In two years the bank moved $7bn in case from Mexico to the USA. Is Tim seriously suggesting that no significant amount of that money was being laundered? It’s pretty difficult to prove where any individual dollar came from, which is why the AML laws make lack of documentation an offence, rather than requiring the authorities to prove a specific instance of money-laundering, but that doesn’t mean this was no more than a technical offence.

  4. “I don’t know why anyone would think the “gunwalking” scandal relevant here,”
    Er, government’s abiding by government regulations?

  5. Hi Tim. I think it is a shame this announcement was not made on the same day as calls to decriminalise cannabis use. However, I am surprised the CEO of HSBC felt that failing to “fill in the forms” was an offence worthy of his resignation.

  6. It’s pretty difficult to prove where any individual dollar came from, which is why the AML laws make lack of documentation an offence, rather than requiring the authorities to prove a specific instance of money-laundering, but that doesn’t mean this was no more than a technical offence.

    Actually, it means precisely that. You cannot decide an offense is too difficult to prove, so pursue a lesser charge instead, and then go around saying that the defendant is not innocent of the more serious charge. On the charge of money laundering, HSBC is innocent until proven guilty: that it may be hard to prove is neither here nor there.

  7. “HSBC, announced that it will pay $1.9 billion (£1.2 billion) to settle allegations that it laundered money for drugs cartels… During approximately the same period … 47,000 people died at the hands of Mexican drugs traffickers.”

    Nice mix of two totally unconnected facts. Such a subtle way of plantting into the minds of the public that HSBC are funding Mexican drugs traffickers.

  8. “The allegation isn’t that they laundered money. It’s that they didn’t fill in the forms properly to prove that they weren’t laundering money.”

    Well, no, in fact the US Senate Report alleged that HSBC was used as a conduit for “drug kingpins and rogue nations”, had “high profile clients involved in drug trafficking”, had frequently circumvented rules designed to prevent dealings with Iran, Burma and North Korea, etc, etc.

    HSBC’s Chief Executive confirmed that “between 2004 and 2010…we failed to spot and deal with unacceptable behaviour”.

    Certainly the precise allegations of the US Senate are unproven. But I don’t think that anyone outside your good self, and including HSBC itself, is claiming that their only fault was not filling in the necessary forms.

  9. Churm Rincewind – Yet the unacceptable behaviour was not doing the correct paper work according to the regulations. The main change in HSBC is tighter controls on that said paperwork, so if there is fault outside this what has changed within HSBC to address it? They don’t seem to have stopped banking in any of the at risk regions at all, nor have they lost there US banking licence.

    How much laundering may or may not have been prevented by the paper work is something that is perhaps debatable. For all the claims of cartel drug money, there doesn’t appear to be any being confiscated. A billion dollars of it and not one impounded?

    The bit I find curious is that $7bn in cash crossed the US boarder from a (effectively) drug state and there doesn’t seem to have been any customs charges or investigations.

  10. PaulB, still repeating the lies about Gunwalker ? The 2006 version was a true sting operation, the guns were tracked and real attempts were made to arrest those involved in purchasing the weapons.

    The Obama/Holder version was entirely different in that they quite deliberately made no attempt to track the guns and encouraged large quantities of the weapons to pass completely from their control and surveillance. They have since deliberately concealed the details and deliberately not provided documents on the degree of oversight to Congress despite that being a legal requirement to do so.

    The release of the weapons to Mexican cartels was a crime that involved deliberately encouraging those cartels to obtain lethal weapons and hence to kill people. And the chance that the US Justice dept under Holder will ever answer for these crimes ? I would say zero, and why then should HSBC have to pay $1.9B while Holder and his Boss walk Scott free ?

  11. the guns were tracked and real attempts were made to arrest those involved in purchasing the weapons.

    That’s republican-speak for “no arrests were made until Obama took over”. This is a scandal, but it’s not Obama’s scandal. If he’d stopped gunwalking operations as soon as he took power you’d be complaining that he’d helped the cartels with a partisan decision to end the programme.

    Back to the subject under discussion:

    HBMX was also the single largest exporter of U.S. dollars to HBUS, transferring over $3 billion in 2007 and $4 billion in 2008,
    amounts that far outstripped larger Mexican banks and other HSBC affiliates. Mexican and U.S. law enforcement and regulatory authorities expressed concern that HBMX’s bulk cash shipments could reach that volume only if they included illegal drug proceeds that had been brought back to Mexico from the United States. In addition, for a three-year period from mid-2006 to mid-2009, HBUS failed to conduct any AML monitoring of its U.S. dollar transactions with HSBC affiliates, including HBMX, which meant that it made no effort to identify any suspicious activity, despite the inherent risks in large cash transactions.

    This is not just a failure of box-ticking by some junior clerk. I’ve personally endured extensive AML training, because that’s what the law requires. HBSC knew what they were supposed to do, and chose not to do it.

    It’s true that the USA is intensely relaxed about imposing swingeing fines on wealthy foreign corporations. But let’s save our outrage for a corporation which hasn’t been flagrantly in breach of the law.

  12. It should be noted, anyone who supports the current US gun laws and yet slates F&F is a shroudwaving moron.

    The reason the operation (which failed utterly) was necessary is that under federal and state laws, any Mexican gangster can walk into a gun shop in the US and buy a gun, and it’s illegal to require gun shops to register or track him.

    Every Mexican gangster who acquired a gun that was supposed to have been tracked under F&F but got through the net, is a Mexican gangster who would otherwise have acquired a gun through a different friend who visited a US gun shop and legally bought a gun. We know this, because otherwise there would have been no operation.

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