Too-Big-To-Jail no longer?
When it comes to financial corruption, no one holds a candle to HSBC.
And why stop, when you are Too-Big-To-Jail?
However, there might be limits to flaunting the law.
U.S. prosecutors are considering a criminal charge against a unit of HSBC Holdings Plc related to conduct on its foreign-exchange desk, according to two people familiar with the matter, imperiling an earlier deal that let the bank avoid prosecution.
The Justice Department has already charged two people who were on the bank’s foreign-exchange desk with improper trading and is asking whether the bank’s internal review of that trading this year should have resulted in disciplinary action, the people said.
Prosecutors’ fresh investigation of HSBC brings them closer to a step that has often been threatened but rarely taken -- tearing up a deferred-prosecution agreement if a company fails to walk the road of reform laid out by the Justice Department.
HSBC is essentially on probation: It admitted in 2012 that it helped Mexican drug cartels launder money and did business with Iran and other sanctioned nations. To avoid charges, it signed the so-called DPA, which required it to improve its internal controls and submit to an outside monitor.
The thing is, this wasn't a case of "Oops! We goofed."
This was a case of "Oops! We got caught."
This bears repeating: in order to more efficiently move as much illegal money as possible into the "legitimate" banking institution HSBC, drug dealers specifically designed boxes to fit through the bank's teller windows. Tony Montana's henchmen marching dufflebags of cash into the fictional "American City Bank" in Miami was actually more subtle than what the cartels were doing when they washed their cash through one of Britain's most storied financial institutions.
So when HSBC managed to make out with just a fine and a slap on the wrist, they were humbled, right? Well, here's the thing.
HSBC Holdings Plc is falling short on its agreement with the U.S. to clean up operations after clients laundered drug money and did business with terrorist regimes, according to two people familiar with a report from the bank’s monitor.
Bank executives engaged in shouting matches with auditors who were seeking to address red flags and created documents after the fact to explain why alerts were dismissed, the people said.
You would think that a bank that broke such laws as the Bank Secrecy Act to the Trading With the Enemy Act might be a little more humble.
HSBC was awarded the infamous "Too-Big-To-Jail" decision by the Justice Department. It didn't matter than some of the money HSBC was laundering had terrorist connections. It didn't even matter than HSBC helped facilitate the purchase of a plane by the cartels later used to smuggle two tonnes of cocaine.
Their punishment: a fine of five weeks of income.
Believe it or not, the drug cartel money laundering scandal is not the biggest scandal for HSBC over the past year.
If you watch 60 Minutes then you probably saw this.
The leaked documents expose pretty much every type of criminal on the planet. The only thing they all had in common was that they were laundering money through HSBC.
Secret documents reveal that global banking giant HSBC profited from doing business with arms dealers who channeled mortar bombs to child soldiers in Africa, bag men for Third World dictators, traffickers in blood diamonds and other international outlaws.
In Defense of HSBC
To be fair, HSBC can hardly be blamed for having zero respect for regulators. After all, no one else does either.
It would be the Wall Street equivalent of a parole violation: Just two years after avoiding prosecution for a variety of crimes, some of the world’s biggest banks are suspected of having broken their promises to behave.
...
Typically, when banks have repeatedly run afoul of the law, they have returned to business as usual with little or no additional penalty — a stark contrast to how prosecutors mete out justice for the average criminal.
Since 2001, at least eight big banks have committed further offenses after receiving an initial deferred-prosecution agreement, according to data assembled by Brandon L. Garrett, a University of Virginia law school professor and author of the book, “Too Big to Jail: How Prosecutors Compromise With Corporations.”
HSBC was founded in Hong Kong in 1865, in the wake of the Second Opium War, when the British, French, and Americans went to war in order to force China to legalize opium in their country. Soon after there was a need to launder all that drug money.
The Chinese characters in the transliteration of its name are auspicious, and can be understood to mean gathering wealth.
HSBC’s first wealth came from opium from India, and later Yunan in China.
So it maybe it shouldn't be a surprise that 150 years later HSBC was caught laundering money for Mexican drug cartels.
Comments
Tell me again someone: Why is nationalizing banks a bad idea?
The state bank of North Dakota, the only state with a state bank, came through the capitalist crash of 2008 with no problems and asked for no state money to prop them up.
I think it's time for me to reread a couple of the founding fathers on the evilness of banks.
"The justness of individual land right is not justifiable to those to whom the land by right of first claim collectively belonged"
Amalgamated Bank plays a role in Dem politics this season
Owned by Union, Amalgamated Bank Gives Lift to the Left
HVF has it's accounts here, as do the state Dem parties - makes it easy for a campaign staffer to move money in and out of accounts on paper (into the state Dem accounts, nearly immediately off to the DNC). Neat and tidy.
'What we are left with is an agency mandated to ensure transparency and disclosure that is actually working to keep the public in the dark' - Ann M. Ravel, former FEC member
Looks like this is running through the DoJ?
Considering Loretta Lynch helped let them off the hook in the first place, my expectation is that she'll find a way this time as well.
You beat me to it.
I was going to say that Lynch was the one who negotiated the original wrist-slap. It was discussed at length in her protracted confirmation hearings. So I suppose they could just cut-and-paste the whole charade from the previous iteration. James Comey was nominated by Obama to be a director of HSBC. He was a board member and on the Financial Services Vulnerabilities Committee until he resigned because the country required his services as FBI Director...
Really? Honest Jim Comey in bed with money launderers?
Oh, nothing to see here folks. Nah, not even the appearance of conflict of interest. Sweet Loretta didn't prosecute Jimbo after taking the reins of Justice over from Hapless Holder. In fact they worked hand-in-glove together on another famous non-prosecution. Hint, hint, it was HRC. Collusion? Laxness? Blindness? How about greed. Jim can go back to overseeing laundromats and Sweet Loretta will have nice jobs offered when BooHoO leaves office.
HSBC caught and warned repeated many times before slap.
From what I read, HSBC was caught money laundering before Holder, Lynch and Obama slapped their wrists. They were told to fix what was happening. I believe the same with the dealings with Iran. So it wasn't like they were just caught once red-handed.
I always think of this story as being told like so. The Mexican government's criminal justice minister made a Mexican bank pay a fine for laundering the money of a murderous drug gang. Nobody went to jail.
Americans would just snicker with contempt over what the Mexican justice minister did. It would raise questions if the justice minister had direct ties to the drug gang, and how much in bribes was he paid.
Holder and Lynch sent a very strong message to drug gangs and cartels. Nothing of substance will happen. Probably the only thing that will happen is that the banksters will develop a gentleman's agreement that the drug cartels pay their fines.
Interesting. From what I understand, Colombian gangs would let the DEA capture several pounds cocaine as a diversion to bigger shipments (yugger shipments) getting into the country. I imagine the same might be happening with the bankster and their drug cartel clients.
Bank of England warning
link
Maybe president Clinton will tell them to "cut it out"
Just kidding. She's likely cheering them on.
josb--I would say that you misquoted Medusa
She actually said: "Now, cut me in!"
My bank in Canada (historical excuse)
quizzes me yearly about money movement purpose. And the US flags more than $10K holdings by regular US folk holding funds in other currencies. At least in Panama one can hold dollars US. Not that $10K is available to me now.
Hey! my dear friends or soon-to-be's, JtC could use the donations to keep this site functioning for those of us who can still see the life preserver or flotsam in the water.