36 ms·

Actually, HSBC has openly admitted to knowingly and willfully taking active steps to disable specific automated countermeasures put in place to prevent money la

Actually, HSBC has openly admitted to knowingly and willfully taking active steps to disable specific automated countermeasures put in place to prevent money laundering, as well as deliberately under-staffing departments responsible for AML compliance. There is little question as to their guilt or complicity.[1] Their punishment? Slightly more than a month's worth of revenue. http://www.justice.gov/opa/documents/hsbc/dpa-attachment-a.pdf http://www.justice.gov/opa/documents/hsbc/dpa-attachment-a.p...

rayiner 13y ago
The relevant text is: "17. From 2006 to 2009, HSBC Bank USA knowingly set the thresholds in CAMP so that wire transfers by customers located in countries categorized as standard or medium risk, including foreign financial institutions with correspondent accounts, would not be subject to automated monitoring unless the customers were otherwise classified as high risk." It's very misleading to leave out the "unless the customers were otherwise classified as high risk." That smacks of someone not understanding how to properly implement the compliance function. The rest of the statement of facts reads like a classic case of a company cheating out on the compliance function (like every company tries to do) and failing to adequately monitor a foreign subsidiary. I think the fine was too small, but the facts are consistent with negligence warranting a fine, not intentional criminal conduct that might warrant jail time.
- milkshakes 13y ago
  No, I believe the text directly that follows the paragraph you quoted is more relevant, and I am Not a Lawyer, but the facts outlined do not appear to be consistent with mere negligence, at least any definition of negligence that I'm familiar with. 18. Between 2000 and 2009, HSBC Bank USA, and its executives and officers, were aware of numerous publicly available and industry-wide advisories about the money laundering risks inherent to Mexican financial institutions. 19. Despite this evidence of the serious money laundering risks associated with doing business in Mexico, from at least 2006 to 2009, HSBC Bank USA rated Mexico as standard risk, its lowest AML risk category. As a result, wire transfers originating from Mexico, including transactions from HSBC Mexico, were generally not reviewed in the CAMP system. From 2006 until May 2009, when HSBC Bank USA raised Mexico’s risk rating to high, over 316,000 transactions worth over $670 billion from HSBC Mexico alone were excluded from monitoring in the CAMP system. Furthermore, the remaining 80% of the document goes on to outline a pervasive and long-running pattern of behavior consistent with willful subversion of both the letter and the spirit of AML. I find it disappointing if not unsurprising that HSBC can continue to operate as usual after openly flaunting at staggering scale the very policies that Mt Gox is being effectively shut down for potentially falling afoul of.
  - rayiner 13y ago
    Translation: other people thought Mexico was a high risk area from 2000 to 2009, but HSBC rated it "Standard Risk" from 2006 to 2009. What about this strikes you as intentionally criminal activity?
    - aspensmonster 13y ago
      The whole point of white collar crime is that it is difficult to distinguish from negligence. And when the standard for prosecution essentially requires that the defense acts like a comic book villain --or at least plainly writes down their intent, rather than masking it-- it really isn't a surprise that the courts are unable to convict over criminal charges. That other people thought (rightfully) that Mexico was a high risk area, while HSBC classified it under their lowest risk tier, smacks of intentional "negligence." So they pay a civil fine --that wasn't nearly big enough-- and the take-home message stays the same: just play dumb if you're ever caught and all will be fine.
      - rayiner 13y ago
        > The whole point of white collar crime is that it is difficult to distinguish from negligence. And when the standard for prosecution essentially requires that the defense acts like a comic book villain --or at least plainly writes down their intent, rather than masking it-- it really isn't a surprise that the courts are unable to convict over criminal charges. This analysis is spot-on. White collar crime is difficult to prosecute because people fuck up all the time and it's hard to distinguish between a run of the mill fuck up and malicious intent, especially because our usual go-to for inferring intent ("motive") is hard to rely on because in the context of billions of dollars flying around, there always seems like there was motive. Hence the fine, though we're in agreement that it should be bigger, in order to make it more justifiable to spend resources on exercising more care.
        nijk 13y ago
        If I get shitfaced whild driving and run someone down in a car, no motive is needed to convict me of crime.
- coldtea 13y ago
  >The relevant text is: "17. From 2006 to 2009, HSBC Bank USA knowingly set the thresholds in CAMP so that wire transfers by customers located in countries categorized as standard or medium risk, including foreign financial institutions with correspondent accounts, would not be subject to automated monitoring unless the customers were otherwise classified as high risk." It's very misleading to leave out the "unless the customers were otherwise classified as high risk." That smacks of someone not understanding how to properly implement the compliance function. I don't see anything misleading. It clearly shows this was no negligence. They purposefully complied only for the coarser and more dangerous cases ("customers classified as high risk") and stood to benefit for letting all the others go through.
Hermel 13y ago
To be fair, you should use the much smaller revenue of the US branch to campare it with a US punishment. Taking global revenue is bindende, even though US lawyers push this nonsense as well.
- lhc- 13y ago
  But its a global organization. Why should we only look at the US Branch, especially considering the ability for multinational companies to shift money around for outside appearances?

rayiner 13y ago

The relevant text is: "17. From 2006 to 2009, HSBC Bank USA knowingly set the thresholds in CAMP so that wire transfers by customers located in countries categorized as standard or medium risk, including foreign financial institutions with correspondent accounts, would not be subject to automated monitoring unless the customers were otherwise classified as high risk." It's very misleading to leave out the "unless the customers were otherwise classified as high risk." That smacks of someone not understanding how to properly implement the compliance function. The rest of the statement of facts reads like a classic case of a company cheating out on the compliance function (like every company tries to do) and failing to adequately monitor a foreign subsidiary. I think the fine was too small, but the facts are consistent with negligence warranting a fine, not intentional criminal conduct that might warrant jail time.

milkshakes 13y ago
No, I believe the text directly that follows the paragraph you quoted is more relevant, and I am Not a Lawyer, but the facts outlined do not appear to be consistent with mere negligence, at least any definition of negligence that I'm familiar with. 18. Between 2000 and 2009, HSBC Bank USA, and its executives and officers, were aware of numerous publicly available and industry-wide advisories about the money laundering risks inherent to Mexican financial institutions. 19. Despite this evidence of the serious money laundering risks associated with doing business in Mexico, from at least 2006 to 2009, HSBC Bank USA rated Mexico as standard risk, its lowest AML risk category. As a result, wire transfers originating from Mexico, including transactions from HSBC Mexico, were generally not reviewed in the CAMP system. From 2006 until May 2009, when HSBC Bank USA raised Mexico’s risk rating to high, over 316,000 transactions worth over $670 billion from HSBC Mexico alone were excluded from monitoring in the CAMP system. Furthermore, the remaining 80% of the document goes on to outline a pervasive and long-running pattern of behavior consistent with willful subversion of both the letter and the spirit of AML. I find it disappointing if not unsurprising that HSBC can continue to operate as usual after openly flaunting at staggering scale the very policies that Mt Gox is being effectively shut down for potentially falling afoul of.
- rayiner 13y ago
  Translation: other people thought Mexico was a high risk area from 2000 to 2009, but HSBC rated it "Standard Risk" from 2006 to 2009. What about this strikes you as intentionally criminal activity?
  - aspensmonster 13y ago
    The whole point of white collar crime is that it is difficult to distinguish from negligence. And when the standard for prosecution essentially requires that the defense acts like a comic book villain --or at least plainly writes down their intent, rather than masking it-- it really isn't a surprise that the courts are unable to convict over criminal charges. That other people thought (rightfully) that Mexico was a high risk area, while HSBC classified it under their lowest risk tier, smacks of intentional "negligence." So they pay a civil fine --that wasn't nearly big enough-- and the take-home message stays the same: just play dumb if you're ever caught and all will be fine.
    - rayiner 13y ago
      > The whole point of white collar crime is that it is difficult to distinguish from negligence. And when the standard for prosecution essentially requires that the defense acts like a comic book villain --or at least plainly writes down their intent, rather than masking it-- it really isn't a surprise that the courts are unable to convict over criminal charges. This analysis is spot-on. White collar crime is difficult to prosecute because people fuck up all the time and it's hard to distinguish between a run of the mill fuck up and malicious intent, especially because our usual go-to for inferring intent ("motive") is hard to rely on because in the context of billions of dollars flying around, there always seems like there was motive. Hence the fine, though we're in agreement that it should be bigger, in order to make it more justifiable to spend resources on exercising more care.
      - nijk 13y ago
        If I get shitfaced whild driving and run someone down in a car, no motive is needed to convict me of crime.
coldtea 13y ago
>The relevant text is: "17. From 2006 to 2009, HSBC Bank USA knowingly set the thresholds in CAMP so that wire transfers by customers located in countries categorized as standard or medium risk, including foreign financial institutions with correspondent accounts, would not be subject to automated monitoring unless the customers were otherwise classified as high risk." It's very misleading to leave out the "unless the customers were otherwise classified as high risk." That smacks of someone not understanding how to properly implement the compliance function. I don't see anything misleading. It clearly shows this was no negligence. They purposefully complied only for the coarser and more dangerous cases ("customers classified as high risk") and stood to benefit for letting all the others go through.

Hermel 13y ago

To be fair, you should use the much smaller revenue of the US branch to campare it with a US punishment. Taking global revenue is bindende, even though US lawyers push this nonsense as well.

lhc- 13y ago
But its a global organization. Why should we only look at the US Branch, especially considering the ability for multinational companies to shift money around for outside appearances?