5 ms·

I don't know if HSBC have done anything at all wrong here - I completely lack the relevant information to form any judgement on that. Until senior executives a

by harry8 6y ago

I don't know if HSBC have done anything at all wrong here - I completely lack the relevant information to form any judgement on that. Until senior executives and boards of directors have something personal very much at stake, like the prospect of a couple of weeks in prison and being banned from holding positions in financial institutions they will always have an incentive to organise their systems to maximise profitability treating fines as a business expense and doing the usual expected value tradeoffs of the outcomes. The CEO has to have systems in place to make willful infringement for profit very difficult. The buck has to stop there. If the CEO has been lax in implementing and maintaining such systems they should not be able to plead ignorance and throw more junoir employees under a bus. It happened on your watch. We've established you didn't take a proper interest in ensuring such things don't happen. Guilty. Negligence, incompetence, inability to take an interest due to more pressing concerns, these should not be valid defences. Now HSBC may have done the right thing, this time, after all that lawlessness they've demonstrated before. I don't know. But if they haven't, the CEO doesn't need to retire on his millions, he needs have a stretch in the big house. Probably doesn't even have to be very long but it has to be to concentrate minds that this is NOT a business expense, you have a personal stake in it. As anything it could be done terribly but seems possible to me to be done well enough to have a good, fair and jusst outcome for all. Especially underlings being surreptitiously coerced into doing bad things.

hdjdbtbgwjsn 6y ago
KYC compliance is already getting painful for ordinary bank customers. Please don't bring in more surveillance.
- harry8 6y ago
  Strawman argument. More surveillance is _not_ what I have proposed. There is an argument that we could have signficantly /less/ regulation if regulation were taken seriously from the top down. This would encourage it to be taken seriously.
  - SpicyLemonZest 6y ago
    What kinds of systems did you have in mind, then? It's hard to see how a CEO could keep personal tabs on all the bank's activities without automated surveillance - it's not like she can individually review every deal the bank makes.
    - helsinkiandrew 6y ago
      No but she puts the organisation and processes in place so that the deals are reviewed with a chain of responsibility
      - SpicyLemonZest 6y ago
        That's how it works today. The problem is that any sequence of links in the chain can decide to lie. That's how most major banking scandals happen; some guy, his boss, and maybe his boss's boss conspire against the rest of the chain to be dishonest together. I feel like I end up circling to 1MDB very often here, but it's just such a good example; the 1MDB bankers had to lie extensively to the chain of responsibility at Goldman Sachs, since the compliance department had repeatedly instructed people not to do business with their major point of contact.
        TeMPOraL 6y ago
        An investigation will reveal a subset of the people in the chain involved in the misdeed and/or coverup. Could the following process work? 1. Identify the subset of people involved and color them red. 2. For each of the red-colored nodes, color their immediate superiors yellow if not colored. 3. Until there are only uncolored or blue nodes left in the company, do: 3a. Put all red and yellow nodes in front of a court (presumably in parallel) 3b. When a verdict is reached for a given node, color it blue. 3c. If a yellow node is revealed to be involved, color it red, and goto step 2. 3d. If an investigation reveals further people possibly involved, color them yellow, goto step 2. This is based on a principle of "your subordinate, your responsibility", and is meant to give everyone involved and their superiors a fair chance of landing jail time. I would hope the courts are already doing something like this.
- jbverschoor 6y ago
  For ordinary customers yes, for fraudulent customers, I think they have other ways. In the end the KPIs are probably something like “number of accounts blocked”, which is easier with ordinary customers
swiley 6y ago
Could it be that the law here is just unreasonable and only the biggest players can afford to get away with breaking it? (likely for an additional premium)
- rando444 6y ago
  The law allows for jail time, it's just rarely pursued these days by the DoJ because Eric Holder changed their system to pursue 'wins' (fines) rather than criminal prosecution, because the bar for successful prosecution is so much higher to convict someone of a crime. Can't lose a case if you never try and convict anyone.
  - spottybanana 6y ago
    From government perspective the prosecution with jailtime will mean lengthy court processes with an army of lawyers. Lots of costs for government and headache for the government officials. Instead if you just impose a fine, the government will actually get lots of money with little work and headache, and everyone involved will be moderately happy.
    - redis_mlc 6y ago
      > From government perspective the prosecution with jailtime will mean lengthy court processes with an army of lawyers. You're missing the point. The US government has no desire to try SEC and/or white-collar cases without almost certainty that they will win. They don't really care about deterrence - losses tarnish runs for political office later. (You can watch "Law and Order" to see how that works at the city and state level.) This is a subtle form of regulatory capture that greatly favors the largest companies. Fines look like a govt. win without the risk of a loss. It's so bad that federal prosecutors mailed companies to not fund legal defenses for executives charged with a crime, in order to win more cases against defendants who couldn't mount a vigorous defense. (There are even some court forms that ask where you got the money to pay your defense lawyer.) The Countryside shutdown was a multi-billion dollar debacle for the US government. Countrywide CEO Angelo Mozilo basically walked away without legal repercussions after it cratered. He even gave discounted mortgages to politicians to ingratiate the company in Washington. Who's going to indict their mortgage holder? https://www.propublica.org/article/cheat-sheet-whats-happened-to-the-big-players-in-the-financial-crisis https://www.propublica.org/article/cheat-sheet-whats-happene... Source: worked for an SEC watchdog.
jbverschoor 6y ago
Oh the banks are 100% in the wrong as they are fully aware what’s happening.
Oricle 6y ago
Good little goyhim!

by harry8 6y ago

hdjdbtbgwjsn 6y ago

KYC compliance is already getting painful for ordinary bank customers. Please don't bring in more surveillance.

harry8 6y ago
Strawman argument. More surveillance is _not_ what I have proposed. There is an argument that we could have signficantly /less/ regulation if regulation were taken seriously from the top down. This would encourage it to be taken seriously.
- SpicyLemonZest 6y ago
  What kinds of systems did you have in mind, then? It's hard to see how a CEO could keep personal tabs on all the bank's activities without automated surveillance - it's not like she can individually review every deal the bank makes.
  - helsinkiandrew 6y ago
    No but she puts the organisation and processes in place so that the deals are reviewed with a chain of responsibility
    - SpicyLemonZest 6y ago
      That's how it works today. The problem is that any sequence of links in the chain can decide to lie. That's how most major banking scandals happen; some guy, his boss, and maybe his boss's boss conspire against the rest of the chain to be dishonest together. I feel like I end up circling to 1MDB very often here, but it's just such a good example; the 1MDB bankers had to lie extensively to the chain of responsibility at Goldman Sachs, since the compliance department had repeatedly instructed people not to do business with their major point of contact.
      - TeMPOraL 6y ago
        An investigation will reveal a subset of the people in the chain involved in the misdeed and/or coverup. Could the following process work? 1. Identify the subset of people involved and color them red. 2. For each of the red-colored nodes, color their immediate superiors yellow if not colored. 3. Until there are only uncolored or blue nodes left in the company, do: 3a. Put all red and yellow nodes in front of a court (presumably in parallel) 3b. When a verdict is reached for a given node, color it blue. 3c. If a yellow node is revealed to be involved, color it red, and goto step 2. 3d. If an investigation reveals further people possibly involved, color them yellow, goto step 2. This is based on a principle of "your subordinate, your responsibility", and is meant to give everyone involved and their superiors a fair chance of landing jail time. I would hope the courts are already doing something like this.
jbverschoor 6y ago
For ordinary customers yes, for fraudulent customers, I think they have other ways. In the end the KPIs are probably something like “number of accounts blocked”, which is easier with ordinary customers

swiley 6y ago

Could it be that the law here is just unreasonable and only the biggest players can afford to get away with breaking it? (likely for an additional premium)

rando444 6y ago
The law allows for jail time, it's just rarely pursued these days by the DoJ because Eric Holder changed their system to pursue 'wins' (fines) rather than criminal prosecution, because the bar for successful prosecution is so much higher to convict someone of a crime. Can't lose a case if you never try and convict anyone.
- spottybanana 6y ago
  From government perspective the prosecution with jailtime will mean lengthy court processes with an army of lawyers. Lots of costs for government and headache for the government officials. Instead if you just impose a fine, the government will actually get lots of money with little work and headache, and everyone involved will be moderately happy.
  - redis_mlc 6y ago
    > From government perspective the prosecution with jailtime will mean lengthy court processes with an army of lawyers. You're missing the point. The US government has no desire to try SEC and/or white-collar cases without almost certainty that they will win. They don't really care about deterrence - losses tarnish runs for political office later. (You can watch "Law and Order" to see how that works at the city and state level.) This is a subtle form of regulatory capture that greatly favors the largest companies. Fines look like a govt. win without the risk of a loss. It's so bad that federal prosecutors mailed companies to not fund legal defenses for executives charged with a crime, in order to win more cases against defendants who couldn't mount a vigorous defense. (There are even some court forms that ask where you got the money to pay your defense lawyer.) The Countryside shutdown was a multi-billion dollar debacle for the US government. Countrywide CEO Angelo Mozilo basically walked away without legal repercussions after it cratered. He even gave discounted mortgages to politicians to ingratiate the company in Washington. Who's going to indict their mortgage holder? https://www.propublica.org/article/cheat-sheet-whats-happened-to-the-big-players-in-the-financial-crisis https://www.propublica.org/article/cheat-sheet-whats-happene... Source: worked for an SEC watchdog.

jbverschoor 6y ago

Oh the banks are 100% in the wrong as they are fully aware what’s happening.

Oricle 6y ago

Good little goyhim!