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What I don't know about this is a lot, and I will admit to having a bias since I have ~25k in cryptocurrency on Gemini, but from a high level does this actually

What I don't know about this is a lot, and I will admit to having a bias since I have ~25k in cryptocurrency on Gemini, but from a high level does this actually make sense? If someone hires a hitman for $9,000, and then that person goes to Bank of America to withdraw money from their account, we don't typically hold BOA liable unless we assume that they know that the reason you're withdrawing the money is for something illegal. Similarly, why sanction the crypto exchange?

Animats 5y ago
40% of transactions were related to criminal activity.
- PretzelPirate 5y ago
  So they were too small to fight back? HSBC has helped far worse groups than this exchange did, and their punishment wasn’t nearly as heavy handed. I’m all for going after companies that are complicit in crime, but we shouldn’t give the big players an easier time than the small ones.
  - axiosgunnar 5y ago
    Are you implying 40% of HSBC clients are blatant criminals? Because surely something would happen to them if that were the case.
    - PretzelPirate 5y ago
      The percentage doesn’t matter. I’m saying that HSBC has helped launder money for terrible people/organizations and the US government would stop more crime by appropriately punishing them vs a small exchange. Edit: I can’t reply to the person who responded, but if you read my original comment, I say I think both should be punished instead of the government going hard against small fish while letting large-scale corruption thrive.
      - nobody9999 5y ago
        >The percentage doesn’t matter. I’m saying that HSBC has helped launder money for terrible people/organizations and the US government would stop more crime by appropriately punishing them vs a small exchange. And so they (HSBC) did[0]. And quite blatantly too. HSBC should have been smacked down hard. They were not. And that was wrong. Is your argument that others doing the same should get a pass because HSBC only got a slap on the wrist? [0] https://www.investopedia.com/stock-analysis/2013/investing-news-for-jan-29-hsbcs-money-laundering-scandal-hbc-scbff-ing-cs-rbs0129.aspx https://www.investopedia.com/stock-analysis/2013/investing-n... Edit: Added link to details of HSBC's bad behavior.
        true_religion 5y ago
        Actually there is legitimate value in saying that all parties should receive the same punishment. If there is precedent for a lesser punishment, then the guilty should all receive it, not just the guilty of with the right connections, wealth or… skin color. There’s another similar argument to be made for mandatory minimum sentences.
        nobody9999 5y ago
        >Actually there is legitimate value in saying that all parties should receive the same punishment. I'd say that parties--when proven guilty--should receive similar punitive action relative to the scope of the issue. But I don't see it as "HSBC got off lightly, so everyone else should too." I see it as "The DOJ dropped the ball with HSBC, and there should have been company-breaking fines/sanctions and those who knowingly assisted the cartels should do real prison time for money laundering and associated RICO charges. That should be the standard, not "oh gee, HSBC got a slap on the wrist so no one should have to take responsibility for actions supporting global narco-traffickers (whether or not such drugs should be legal is another discussion) and state sponsors of terrorism. If a case is handled inappropriately, the solution isn't to handle all similar cases inappropriately -- the solution is to do it correctly the next time and the time after that and the time after that, etc. Being a chartered bank (or any corporation) is a privilege that can and should be revoked if those privileges are abused as HSBC did. Or are you standing up for the banking system being allowed to knowingly profit from the death, murder and misery of other people? The irony of HSBC's origins as the funder the opium trade in China isn't lost on me. But that was ~150 years ago and times have changed.
  - kadoban 5y ago
    That's a good argument for punishing HSBC more than was done. In general in the USA we're really bad at holding the rich and powerful accountable. It's a serious issue.
  - deleted 5y ago
    [deleted]
  - kube-system 5y ago
    I'm suspect that if 40% of HCBC's business was illegal, the regulatory actions taken may have been different. Generally, regulators don't run businesses with a quarter-million employees into the ground for the mistakes of a few, particularly when there's a path forward to compliance. Organizations that demonstrate they exist largely to facilitate crime don't get the same treatment. This makes practical sense.
KptMarchewa 5y ago
If your business deals with double digit percentage of criminal activity, it's called fencing and it's a crime.
- superkuh 5y ago
  At least until you do it at a scale large enough to make significant campaign contributions like, say, Bank of America or Wells Fargo. And those companies not only processed large relative amounts of criminal proceeds as companies they literally committed fraud themselves against their own customers.
  - deleted 5y ago
    [deleted]
  - KptMarchewa 5y ago
    In absolute amounts, yes. In relative to their total operations? No.
- tombert 5y ago
  Fair enough! As I said, I don't know a ton about this stuff, so always good to have knowledge shed for me. Out of curiosity, what do regular banks (e.g. BOA in my example) do to avoid this problem? Just basic background checks and reporting suspicious behavior to the FBI or SEC or something?
  - geofft 5y ago
    Yup, there's a thing called a "suspicious activity report": https://www.occ.treas.gov/topics/supervision-and-examination/bank-operations/financial-crime/suspicious-activity-reports/index-suspicious-activity-reports.html https://www.occ.treas.gov/topics/supervision-and-examination... https://en.wikipedia.org/wiki/Suspicious_activity_report https://en.wikipedia.org/wiki/Suspicious_activity_report https://www.fincen.gov/reports/sar-stats https://www.fincen.gov/reports/sar-stats Millions of these are filed per year. Obviously not all of these - probably not even most of these - are about actual crimes or end up in actual prosecutions, but the banks still have to file them.
complianceguy 5y ago
BoA would have a legal requirement to verify the identity of their customers and in some cases the source of their funds, and if they failed to meet those obligations they would indeed be held liable. This action also has the side effect of making it illegal for a victim organization to pay a ransom that would run through this exchange, which may be desirable outcome from the government's POV.
- deleted 5y ago
  [deleted]

Animats 5y ago

40% of transactions were related to criminal activity.

PretzelPirate 5y ago
So they were too small to fight back? HSBC has helped far worse groups than this exchange did, and their punishment wasn’t nearly as heavy handed. I’m all for going after companies that are complicit in crime, but we shouldn’t give the big players an easier time than the small ones.
- axiosgunnar 5y ago
  Are you implying 40% of HSBC clients are blatant criminals? Because surely something would happen to them if that were the case.
  - PretzelPirate 5y ago
    The percentage doesn’t matter. I’m saying that HSBC has helped launder money for terrible people/organizations and the US government would stop more crime by appropriately punishing them vs a small exchange. Edit: I can’t reply to the person who responded, but if you read my original comment, I say I think both should be punished instead of the government going hard against small fish while letting large-scale corruption thrive.
    - nobody9999 5y ago
      >The percentage doesn’t matter. I’m saying that HSBC has helped launder money for terrible people/organizations and the US government would stop more crime by appropriately punishing them vs a small exchange. And so they (HSBC) did[0]. And quite blatantly too. HSBC should have been smacked down hard. They were not. And that was wrong. Is your argument that others doing the same should get a pass because HSBC only got a slap on the wrist? [0] https://www.investopedia.com/stock-analysis/2013/investing-news-for-jan-29-hsbcs-money-laundering-scandal-hbc-scbff-ing-cs-rbs0129.aspx https://www.investopedia.com/stock-analysis/2013/investing-n... Edit: Added link to details of HSBC's bad behavior.
      - true_religion 5y ago
        Actually there is legitimate value in saying that all parties should receive the same punishment. If there is precedent for a lesser punishment, then the guilty should all receive it, not just the guilty of with the right connections, wealth or… skin color. There’s another similar argument to be made for mandatory minimum sentences.
        nobody9999 5y ago
        >Actually there is legitimate value in saying that all parties should receive the same punishment. I'd say that parties--when proven guilty--should receive similar punitive action relative to the scope of the issue. But I don't see it as "HSBC got off lightly, so everyone else should too." I see it as "The DOJ dropped the ball with HSBC, and there should have been company-breaking fines/sanctions and those who knowingly assisted the cartels should do real prison time for money laundering and associated RICO charges. That should be the standard, not "oh gee, HSBC got a slap on the wrist so no one should have to take responsibility for actions supporting global narco-traffickers (whether or not such drugs should be legal is another discussion) and state sponsors of terrorism. If a case is handled inappropriately, the solution isn't to handle all similar cases inappropriately -- the solution is to do it correctly the next time and the time after that and the time after that, etc. Being a chartered bank (or any corporation) is a privilege that can and should be revoked if those privileges are abused as HSBC did. Or are you standing up for the banking system being allowed to knowingly profit from the death, murder and misery of other people? The irony of HSBC's origins as the funder the opium trade in China isn't lost on me. But that was ~150 years ago and times have changed.
- kadoban 5y ago
  That's a good argument for punishing HSBC more than was done. In general in the USA we're really bad at holding the rich and powerful accountable. It's a serious issue.
- deleted 5y ago
  [deleted]
- kube-system 5y ago
  I'm suspect that if 40% of HCBC's business was illegal, the regulatory actions taken may have been different. Generally, regulators don't run businesses with a quarter-million employees into the ground for the mistakes of a few, particularly when there's a path forward to compliance. Organizations that demonstrate they exist largely to facilitate crime don't get the same treatment. This makes practical sense.

KptMarchewa 5y ago

If your business deals with double digit percentage of criminal activity, it's called fencing and it's a crime.

superkuh 5y ago
At least until you do it at a scale large enough to make significant campaign contributions like, say, Bank of America or Wells Fargo. And those companies not only processed large relative amounts of criminal proceeds as companies they literally committed fraud themselves against their own customers.
- deleted 5y ago
  [deleted]
- KptMarchewa 5y ago
  In absolute amounts, yes. In relative to their total operations? No.
tombert 5y ago
Fair enough! As I said, I don't know a ton about this stuff, so always good to have knowledge shed for me. Out of curiosity, what do regular banks (e.g. BOA in my example) do to avoid this problem? Just basic background checks and reporting suspicious behavior to the FBI or SEC or something?
- geofft 5y ago
  Yup, there's a thing called a "suspicious activity report": https://www.occ.treas.gov/topics/supervision-and-examination/bank-operations/financial-crime/suspicious-activity-reports/index-suspicious-activity-reports.html https://www.occ.treas.gov/topics/supervision-and-examination... https://en.wikipedia.org/wiki/Suspicious_activity_report https://en.wikipedia.org/wiki/Suspicious_activity_report https://www.fincen.gov/reports/sar-stats https://www.fincen.gov/reports/sar-stats Millions of these are filed per year. Obviously not all of these - probably not even most of these - are about actual crimes or end up in actual prosecutions, but the banks still have to file them.

complianceguy 5y ago

BoA would have a legal requirement to verify the identity of their customers and in some cases the source of their funds, and if they failed to meet those obligations they would indeed be held liable. This action also has the side effect of making it illegal for a victim organization to pay a ransom that would run through this exchange, which may be desirable outcome from the government's POV.

deleted 5y ago
[deleted]