6 ms·

Ah Matt Taibbi... guaranteed unbiased reporting on banks. It's not clear whether any employees knew they were facilitating money laundering. What HSBC has been

by retube 13y ago

Ah Matt Taibbi... guaranteed unbiased reporting on banks. It's not clear whether any employees knew they were facilitating money laundering. What HSBC has been found guilty of (and what they are being fined for) is lacking sufficient controls to detect money laundering activity. This is quite different to wilfully and knowingly assiting money laundering for drug cartels. All sorts of businesses are part of the cash economy and pay in large amounts of cash on a daily and weekly basis. The worst critiscm you can level here is that a lowly-paid cashier was insufficiently trained to spot potentially dubious sources of cash that were being paid in. Actually reading the whole article... it's just sensationalist drivel. There is no claim compliance officers were laundering money. In fact a compliance officer goes no where near money. Bonus clawback is in reponse to weak controls, not becuase they were in the employ of drug cartels.

makomk 13y ago
If they weren't a bank it wouldn't matter - that's the point of the article. People have had their entire homes confiscated because one of their kids was drug dealing and they didn't realise, yet when banks assist drug dealers the Government doesn't even take all the money they made from doing so.
- retube 13y ago
  > People have had their entire homes confiscated because one of their kids was drug dealing and they didn't realise yeah that's ridiculous, but that's the US legal system for you and nothing to do with the banks.
  - carbocation 13y ago
    I don't believe that your interlocutors are anti-bank per se, but instead they are raising concern about unequal treatment under the law. In this case, the banks are the benefactors and the individual, by comparison, would be the loser were he/she to encounter a similar situation.
    - rayiner 13y ago
      These sorts of laws are all about intent. The reason individuals tend to lose in these situations while large organizations do not is: 1) Large organizations spend a ton of money and effort on legal compliance, while individuals and small organizations do not; 2) It's much more difficult to impute intent onto a large organization that is incidentally exposed to criminal activity as a matter of course. The basic fact is this: if you're a bank operating in Central or Latin America, your accounts will be used for money laundering to some degree. This is true no matter how strong your controls are. This is just the nature of being an institution that offers banking services to the public in a country that is flush with drug money. However, if you're an individual and your accounts are used to launder drug money, that gives rise to a totally different inference of intent. Individuals rarely find themselves incidentally or accidentally involved with money laundering. Yes, large organizations tend to get the "benefit of the doubt" in such cases, but it's wholly warranted.
      - sseveran 13y ago
        They don't get the benefit of the doubt. Prosecuting HSBC and its officers would be a mammoth undertaking costing hundreds of millions or billions of dollars. The reason HSBC (or any other large organization) pleads guilty or enters into a non-prosecution agreement is that it usually lets them off for less (on a risk adjusted basis) than fighting. The prosecutors also don't want to spend the several years in litigation so they get a scalp to carry in front of the cameras to claim that they are being tough. If we were serious as a country about compliance with our laws we would have just stripped them of their US banking license. Of course this would have rather large ramifications for many other people that would mostly be bad.
  - amirmc 13y ago
    Except if you're a big and important bank, then things like 'zero tolerance' don't really apply. You then just get a slap on the wrist for insufficient controls. Note that they chose not to indict HSBC. it's not that they didn't have enough to go on.
deleted 13y ago
[deleted]
koide 13y ago
And is the "no charges to be pursued due to risk of endangering the world's financial stability" line an outright lie?
ldng 13y ago
It's the fourth or the fifth time they've been caught "lacking sufficient controls to detect money laundering activity" in something like 15 years. If that is not "wilfully and knowingly", I don't know what it is.
milkshakes 13y ago
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. [#]: http://www.justice.gov/opa/documents/hsbc/dpa-attachment-a.pdf http://www.justice.gov/opa/documents/hsbc/dpa-attachment-a.p...
- retube 13y ago
  > to knowingly and willfully taking active steps[#] to disable specific automated countermeasures I can't see that anywhere in the link.
  - xuhu 13y ago
    Here you go: "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."
    - retube 13y ago
      Yes, so what? There is nothing in this wording that suggests that thresholds were set deliberately to facilitate money laundering. It's just a statement of where the threshold was set. Perhaps in retrospect it was too weak, but given the volumes of cash a bank like HSBC processes I'm sure they were trying to strike a balance between appropriate oversight and what's operationally feasible.
      - milkshakes 13y ago
        your argument might carry more credibility if the rest of the document did not go on to extensively document the backdrop against which this and similar decisions were made. in fact, that's the entire point of this document.
mrobot 13y ago
> The worst critiscm you can level here is that a lowly-paid cashier was insufficiently trained to spot potentially dubious sources of cash that were being paid in. It seems like the frequency with which this was happening would suggest this could not have been hard to detect. Can we really blame this on a single lowly paid cashier? Am i missing something, or does this sound more like multiple cashiers taking comical cash deposits over a very long period? Why should this lean toward being hard to detect and not willful ignorance and thus willful assistance?
- xradionut 13y ago
  This level of activity is easy to detect if the institution wants to detect it and compile with the law. Chances are the business analyst(s) that did detect it were told to shut up.
  - mrobot 13y ago
    Ah, ok. So where is the protest?
moocowduckquack 13y ago
What HSBC has been found guilty of Failure to Maintain an Effective Money Laundering Program, Failure to Conduct Due Diligence on Correspondent Bank Accounts Involving Foreign Persons (for the actions involving Mexican cartels and Saudi linked terrorist organisations), violating the International Emergency Economic Powers Act (for knowingly and willfully facilitating prohibited transactions with Iran, Libya, Sudan, and Burma), and violating the Trading With the Enemy Act (for moving money for Cuba). from here - http://www.americancriminallawreview.com/Drupal/blogs/blog-entry/hsbc-and-money-laundering-%E2%80%9Ctoo-big-indict%E2%80%9D-02-15-2013 http://www.americancriminallawreview.com/Drupal/blogs/blog-e... edit - and that's what they pled guilty to as their plea bargain after prosecution was dropped.
- retube 13y ago
  > Failure to Maintain an Effective Money Laundering Program, Failure to Conduct Due Diligence on Correspondent Bank Accounts Involving Foreign Persons Yes, exactly, they are being penalised for weak controls as I said, not for wilful complicity in money laundering > for knowingly and willfully facilitating prohibited transactions with Iran, Libya, Sudan, and Burma.... for moving money for Cuba well that's got nothing to do with mexican drug money laundering, and whilst that may well have been in contravnention of US law at a moral or ethical level there's nothing (superficially) wrong here; plenty of reasons for legitimate business with these states which a UK company should be able to conduct if it chooses.
  - milkshakes 13y ago
    "The Department alleges, and HSBC Bank USA admits, that HSBC Bank USA’s conduct, as described herein, violated the BSA. Specifically, HSBC Bank USA violated Title 31, United States Code, Section 5318(h)(1), which makes it a crime to willfully fail to establish and maintain an effective AML program, and Title 31, United States Code, Section 5318(i)(1), which makes it a crime to willfully fail to establish due diligence for foreign correspondent accounts." http://www.justice.gov/opa/documents/hsbc/dpa-attachment-a.pdf http://www.justice.gov/opa/documents/hsbc/dpa-attachment-a.p...
xradionut 13y ago
You obviously do not have any domain knowledge about financial regulations nor the banking business at large. Accounting isn't rocket surgery, this level of activity is easy to spot, especially with software.(0) Plus requirements for tracking and reporting large cash deposits of this sort have been on the law books for years. (Not to mention the newer anti-terrorism requirements.) (0) I've been working in the software side of the financial analysis for over a decade. While not trivial, transaction analysis is very common for various purposes including compliance.
- moron4hire 13y ago
  That was one of my proudest moments in my career: I wrote a system to analyze drug-sales-rep activities, one feature being to compare the times they reported they gave samples to doctors to bare-minimum time to travel between those doctor locations. My client found a woman who had been selling the samples to friends with it.
amalag 13y ago
He is simply asking why the overzealous approach the Justice department takes with drug related asset forfeiture was not followed with a large offender.
larrys 13y ago
"Ah Matt Taibbi... guaranteed unbiased reporting on banks." Agree. But at least he was clear in his first paragraph about the degree of his professionalism by saying this: "Assistant Attorney General and longtime Bill Clinton pal Lanny Breuer has a message for you: Bite me."
walshemj 13y ago
yep by his standards any plumber/electrician would be guilty as sin - funny how US bodies love to go after the foreigner - how very french of them.

by retube 13y ago

makomk 13y ago

If they weren't a bank it wouldn't matter - that's the point of the article. People have had their entire homes confiscated because one of their kids was drug dealing and they didn't realise, yet when banks assist drug dealers the Government doesn't even take all the money they made from doing so.

retube 13y ago
> People have had their entire homes confiscated because one of their kids was drug dealing and they didn't realise yeah that's ridiculous, but that's the US legal system for you and nothing to do with the banks.
- carbocation 13y ago
  I don't believe that your interlocutors are anti-bank per se, but instead they are raising concern about unequal treatment under the law. In this case, the banks are the benefactors and the individual, by comparison, would be the loser were he/she to encounter a similar situation.
  - rayiner 13y ago
    These sorts of laws are all about intent. The reason individuals tend to lose in these situations while large organizations do not is: 1) Large organizations spend a ton of money and effort on legal compliance, while individuals and small organizations do not; 2) It's much more difficult to impute intent onto a large organization that is incidentally exposed to criminal activity as a matter of course. The basic fact is this: if you're a bank operating in Central or Latin America, your accounts will be used for money laundering to some degree. This is true no matter how strong your controls are. This is just the nature of being an institution that offers banking services to the public in a country that is flush with drug money. However, if you're an individual and your accounts are used to launder drug money, that gives rise to a totally different inference of intent. Individuals rarely find themselves incidentally or accidentally involved with money laundering. Yes, large organizations tend to get the "benefit of the doubt" in such cases, but it's wholly warranted.
    - sseveran 13y ago
      They don't get the benefit of the doubt. Prosecuting HSBC and its officers would be a mammoth undertaking costing hundreds of millions or billions of dollars. The reason HSBC (or any other large organization) pleads guilty or enters into a non-prosecution agreement is that it usually lets them off for less (on a risk adjusted basis) than fighting. The prosecutors also don't want to spend the several years in litigation so they get a scalp to carry in front of the cameras to claim that they are being tough. If we were serious as a country about compliance with our laws we would have just stripped them of their US banking license. Of course this would have rather large ramifications for many other people that would mostly be bad.
- amirmc 13y ago
  Except if you're a big and important bank, then things like 'zero tolerance' don't really apply. You then just get a slap on the wrist for insufficient controls. Note that they chose not to indict HSBC. it's not that they didn't have enough to go on.

deleted 13y ago

[deleted]

koide 13y ago

And is the "no charges to be pursued due to risk of endangering the world's financial stability" line an outright lie?

ldng 13y ago

It's the fourth or the fifth time they've been caught "lacking sufficient controls to detect money laundering activity" in something like 15 years. If that is not "wilfully and knowingly", I don't know what it is.

milkshakes 13y ago

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. [#]: http://www.justice.gov/opa/documents/hsbc/dpa-attachment-a.pdf http://www.justice.gov/opa/documents/hsbc/dpa-attachment-a.p...

retube 13y ago
> to knowingly and willfully taking active steps[#] to disable specific automated countermeasures I can't see that anywhere in the link.
- xuhu 13y ago
  Here you go: "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."
  - retube 13y ago
    Yes, so what? There is nothing in this wording that suggests that thresholds were set deliberately to facilitate money laundering. It's just a statement of where the threshold was set. Perhaps in retrospect it was too weak, but given the volumes of cash a bank like HSBC processes I'm sure they were trying to strike a balance between appropriate oversight and what's operationally feasible.
    - milkshakes 13y ago
      your argument might carry more credibility if the rest of the document did not go on to extensively document the backdrop against which this and similar decisions were made. in fact, that's the entire point of this document.

mrobot 13y ago

> The worst critiscm you can level here is that a lowly-paid cashier was insufficiently trained to spot potentially dubious sources of cash that were being paid in. It seems like the frequency with which this was happening would suggest this could not have been hard to detect. Can we really blame this on a single lowly paid cashier? Am i missing something, or does this sound more like multiple cashiers taking comical cash deposits over a very long period? Why should this lean toward being hard to detect and not willful ignorance and thus willful assistance?

xradionut 13y ago
This level of activity is easy to detect if the institution wants to detect it and compile with the law. Chances are the business analyst(s) that did detect it were told to shut up.
- mrobot 13y ago
  Ah, ok. So where is the protest?

moocowduckquack 13y ago

What HSBC has been found guilty of Failure to Maintain an Effective Money Laundering Program, Failure to Conduct Due Diligence on Correspondent Bank Accounts Involving Foreign Persons (for the actions involving Mexican cartels and Saudi linked terrorist organisations), violating the International Emergency Economic Powers Act (for knowingly and willfully facilitating prohibited transactions with Iran, Libya, Sudan, and Burma), and violating the Trading With the Enemy Act (for moving money for Cuba). from here - http://www.americancriminallawreview.com/Drupal/blogs/blog-entry/hsbc-and-money-laundering-%E2%80%9Ctoo-big-indict%E2%80%9D-02-15-2013 http://www.americancriminallawreview.com/Drupal/blogs/blog-e... edit - and that's what they pled guilty to as their plea bargain after prosecution was dropped.

retube 13y ago
> Failure to Maintain an Effective Money Laundering Program, Failure to Conduct Due Diligence on Correspondent Bank Accounts Involving Foreign Persons Yes, exactly, they are being penalised for weak controls as I said, not for wilful complicity in money laundering > for knowingly and willfully facilitating prohibited transactions with Iran, Libya, Sudan, and Burma.... for moving money for Cuba well that's got nothing to do with mexican drug money laundering, and whilst that may well have been in contravnention of US law at a moral or ethical level there's nothing (superficially) wrong here; plenty of reasons for legitimate business with these states which a UK company should be able to conduct if it chooses.
- milkshakes 13y ago
  "The Department alleges, and HSBC Bank USA admits, that HSBC Bank USA’s conduct, as described herein, violated the BSA. Specifically, HSBC Bank USA violated Title 31, United States Code, Section 5318(h)(1), which makes it a crime to willfully fail to establish and maintain an effective AML program, and Title 31, United States Code, Section 5318(i)(1), which makes it a crime to willfully fail to establish due diligence for foreign correspondent accounts." http://www.justice.gov/opa/documents/hsbc/dpa-attachment-a.pdf http://www.justice.gov/opa/documents/hsbc/dpa-attachment-a.p...

xradionut 13y ago

You obviously do not have any domain knowledge about financial regulations nor the banking business at large. Accounting isn't rocket surgery, this level of activity is easy to spot, especially with software.(0) Plus requirements for tracking and reporting large cash deposits of this sort have been on the law books for years. (Not to mention the newer anti-terrorism requirements.) (0) I've been working in the software side of the financial analysis for over a decade. While not trivial, transaction analysis is very common for various purposes including compliance.

moron4hire 13y ago
That was one of my proudest moments in my career: I wrote a system to analyze drug-sales-rep activities, one feature being to compare the times they reported they gave samples to doctors to bare-minimum time to travel between those doctor locations. My client found a woman who had been selling the samples to friends with it.

amalag 13y ago

He is simply asking why the overzealous approach the Justice department takes with drug related asset forfeiture was not followed with a large offender.

larrys 13y ago

"Ah Matt Taibbi... guaranteed unbiased reporting on banks." Agree. But at least he was clear in his first paragraph about the degree of his professionalism by saying this: "Assistant Attorney General and longtime Bill Clinton pal Lanny Breuer has a message for you: Bite me."

walshemj 13y ago

yep by his standards any plumber/electrician would be guilty as sin - funny how US bodies love to go after the foreigner - how very french of them.