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> In this case, HSBC provided money-laundering services of more than $881 million to various drug cartels including Mexico’s Sinaloa cartel and Colombia’s Norte

> In this case, HSBC provided money-laundering services of more than $881 million to various drug cartels including Mexico’s Sinaloa cartel and Colombia’s Norte del Valle cartel. This included bulk movements of cash from the bank's Mexican unit to the U.S., with little or no oversight of the transactions. It also conducted transactions with Iran, removing references to the country in an effort to conceal them. Only $881m? Isn't that relative chump change given the size and scale of these ultra large global banks? I find it surprising they thought it was worth the risk, though humans being short-sighted is a tale as old as time.

albntomat0 4y ago
It's possible this was started by some sub-org within HSBC, where 881M would be a large fraction of that org's size. The management layer above them then doesn't look too deeply, or ensure prior compliance procedure, while promoting and giving bonuses to those who hit high numbers.
- bitcharmer 4y ago
  This is exactly how these things happen. In an organisation that employs quarter of a million employees it's impossible to have perfect transparency and controls everywhere. At this scale you just have to trust that people below you do the right thing. That's not to say there should be no criminal charges for individuals. Just explaining how this transpired.
  - mnau 4y ago
    It's responsibility of the CEO/BoD to ensure compliance. At that size and in that market, compliance departments are huge. We get regular audits of our work by an outside company. The exact auditing company rotate to ensure no incompetence/cronyism hides something. As the article states: > Indeed, prior to 2010 when the OCC cited the bank for many AML deficiencies—including a huge backlog of unreviewed accounts and failure to file Suspicious Activity Reports (SARs)—for the previous six years the agency failed to take any enforcement action against the bank
  - rqtwteye 4y ago
    If the big guys aren’t able to be responsible for bad things they also shouldn’t take responsibility for good things and not get their big paychecks. In the end if an organization is too big to be controlled and to take responsibility it shouldn’t exist and be broken up.
gadders 4y ago
These aren't business decisions taken to corner the money laundering market for Mexican cartels. It's more like Mexican cartels try all the banks to see which ones they can launder money through, and when they find one with poor controls that allow it they double-down on using that bank until their activity is stopped. Maybe at the country level they were happy with the transaction fees, but I would be surprised if it went any higher than that and certainly wouldn't be worth the risk.
- fogforthought93 4y ago
  Do you have a source for the claim that drug cartels "try all the banks to see which ones they can launder money through"? I don't believe that's how it works at all. If you read, for example Drug Cartels Do Not Exist by Oswaldo Zavala, you'll see that this money is fundamental to how global finance operates. Drug money provided the necessary liquidity to keep the world finance system from crashing in '08. It's the main event, not a sideshow.
  - loeg 4y ago
    That is an exceptionally contrarian claim.
    - fogforthought93 4y ago
      Which one? Back up what you say. Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organised crime were "the only liquid investment capital" available to some banks on the brink of collapse last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.
  - fmajid 4y ago
    For HSBC I doubt it. But I remember seeing a map of all the branches the defunct BCCI bank had, and they had something like 10x more branches in Colombia than in the US (this was a Pakistani Bank). They went under a few years later.
dankboys 4y ago
One of the key bits is that the cartel worked out the OFAC check by HSBC was shitty so could add spaces etc to bypass it. It wasn't a conscious decision, but a failure of their process.
deleted 4y ago
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albntomat0 4y ago

It's possible this was started by some sub-org within HSBC, where 881M would be a large fraction of that org's size. The management layer above them then doesn't look too deeply, or ensure prior compliance procedure, while promoting and giving bonuses to those who hit high numbers.

bitcharmer 4y ago
This is exactly how these things happen. In an organisation that employs quarter of a million employees it's impossible to have perfect transparency and controls everywhere. At this scale you just have to trust that people below you do the right thing. That's not to say there should be no criminal charges for individuals. Just explaining how this transpired.
- mnau 4y ago
  It's responsibility of the CEO/BoD to ensure compliance. At that size and in that market, compliance departments are huge. We get regular audits of our work by an outside company. The exact auditing company rotate to ensure no incompetence/cronyism hides something. As the article states: > Indeed, prior to 2010 when the OCC cited the bank for many AML deficiencies—including a huge backlog of unreviewed accounts and failure to file Suspicious Activity Reports (SARs)—for the previous six years the agency failed to take any enforcement action against the bank
- rqtwteye 4y ago
  If the big guys aren’t able to be responsible for bad things they also shouldn’t take responsibility for good things and not get their big paychecks. In the end if an organization is too big to be controlled and to take responsibility it shouldn’t exist and be broken up.

gadders 4y ago

These aren't business decisions taken to corner the money laundering market for Mexican cartels. It's more like Mexican cartels try all the banks to see which ones they can launder money through, and when they find one with poor controls that allow it they double-down on using that bank until their activity is stopped. Maybe at the country level they were happy with the transaction fees, but I would be surprised if it went any higher than that and certainly wouldn't be worth the risk.

fogforthought93 4y ago
Do you have a source for the claim that drug cartels "try all the banks to see which ones they can launder money through"? I don't believe that's how it works at all. If you read, for example Drug Cartels Do Not Exist by Oswaldo Zavala, you'll see that this money is fundamental to how global finance operates. Drug money provided the necessary liquidity to keep the world finance system from crashing in '08. It's the main event, not a sideshow.
- loeg 4y ago
  That is an exceptionally contrarian claim.
  - fogforthought93 4y ago
    Which one? Back up what you say. Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organised crime were "the only liquid investment capital" available to some banks on the brink of collapse last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.
- fmajid 4y ago
  For HSBC I doubt it. But I remember seeing a map of all the branches the defunct BCCI bank had, and they had something like 10x more branches in Colombia than in the US (this was a Pakistani Bank). They went under a few years later.

dankboys 4y ago

One of the key bits is that the cartel worked out the OFAC check by HSBC was shitty so could add spaces etc to bypass it. It wasn't a conscious decision, but a failure of their process.

deleted 4y ago

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