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I don't understand your position on HSBC's guilt. There is plenty of evidence that they have intentionally weakened their AML program. When they rated Mexico wi

by jkn 13y ago

I don't understand your position on HSBC's guilt. There is plenty of evidence that they have intentionally weakened their AML program. When they rated Mexico with the lowest AML risk in contradiction to every indicator in the industry, they knew of the consequences. They knew it would facilitate money laundering (by definition), in one of the hottest drug trafficking region. Does it matter so much that their ultimate goal was to make money rather than launder money? Of course money laundering was not an end in itself. That's probably why "willfully fail to establish and maintain an effective AML program" was made a crime: to give legislation some teeth in precisely a case like this, no?

mike_hearn 13y ago
No, you keep saying this. There is NO consensus that Mexico is high risk. In fact the consensus is that it isn't. Go look at this list: http://www.fatf-gafi.org/topics/high-riskandnon-cooperativejurisdictions/documents/fatf-public-statement-oct-2013.html http://www.fatf-gafi.org/topics/high-riskandnon-cooperativej... The FATF (Financial Action Task Force) co-ordinates AML regulations around the world. Note that Mexico is not on the list. Nor has it been there for a long time. What's more, HSBC classified Mexico as standard risk but this did not override account level risk markers, it just meant they were not attempting to manually investigate every single wire transfer in or out of Mexico, an impossibly vast job. Wire traffic between US and Mexico is vastly larger than between, say, US and Algeria. HSBC did not do anything wrong here.
- jkn 13y ago
  The absence of Mexico from the FATF blacklist simply means that Mexico makes a good effort at implementing the FATF recommendations. Which makes sense since Mexico is a FATF member (I don't think there is a single FATF member in the FATF list of high-risk and non cooperative countries). It doesn't account for the high risk of money laundering associated with the social context of drug trafficking (this was also the government's point I think). For what it's worth, the 2009 IMF report on Mexico's FATF compliance[1] identifies a lot of issues regarding Mexico's AML process (see the ratings table starting at page 311). Reading the Statement of Facts, I personally find the evidence compelling that there was a lot of blind eye turning at HSBC to say the least. Just one example: When suspicious activity was identified, HSBC Mexico repeatedly failed to take action to close the accounts. Senior business executives at HSBC Mexico repeatedly overruled recommendations from its own AML committee to close accounts with documented suspicious activity. In July 2007, a senior compliance officer at HSBC Group told HSBC Mexico’s Chief Compliance Officer that “[t]he AML committee just can’t keep rubber-stamping unacceptable risks merely because someone on the business side writes a nice letter. It needs to take a firmer stand. It needs some cojones. We have seen this movie before, and it ends badly.” (BTW I don't "keep saying this". It was my first comment on the topic. You probably confused me with milkshakes or dalke.) [1] http://www.imf.org/external/pubs/ft/scr/2009/cr0907.pdf http://www.imf.org/external/pubs/ft/scr/2009/cr0907.pdf

by jkn 13y ago

mike_hearn 13y ago

No, you keep saying this. There is NO consensus that Mexico is high risk. In fact the consensus is that it isn't. Go look at this list: http://www.fatf-gafi.org/topics/high-riskandnon-cooperativejurisdictions/documents/fatf-public-statement-oct-2013.html http://www.fatf-gafi.org/topics/high-riskandnon-cooperativej... The FATF (Financial Action Task Force) co-ordinates AML regulations around the world. Note that Mexico is not on the list. Nor has it been there for a long time. What's more, HSBC classified Mexico as standard risk but this did not override account level risk markers, it just meant they were not attempting to manually investigate every single wire transfer in or out of Mexico, an impossibly vast job. Wire traffic between US and Mexico is vastly larger than between, say, US and Algeria. HSBC did not do anything wrong here.

jkn 13y ago
The absence of Mexico from the FATF blacklist simply means that Mexico makes a good effort at implementing the FATF recommendations. Which makes sense since Mexico is a FATF member (I don't think there is a single FATF member in the FATF list of high-risk and non cooperative countries). It doesn't account for the high risk of money laundering associated with the social context of drug trafficking (this was also the government's point I think). For what it's worth, the 2009 IMF report on Mexico's FATF compliance[1] identifies a lot of issues regarding Mexico's AML process (see the ratings table starting at page 311). Reading the Statement of Facts, I personally find the evidence compelling that there was a lot of blind eye turning at HSBC to say the least. Just one example: When suspicious activity was identified, HSBC Mexico repeatedly failed to take action to close the accounts. Senior business executives at HSBC Mexico repeatedly overruled recommendations from its own AML committee to close accounts with documented suspicious activity. In July 2007, a senior compliance officer at HSBC Group told HSBC Mexico’s Chief Compliance Officer that “[t]he AML committee just can’t keep rubber-stamping unacceptable risks merely because someone on the business side writes a nice letter. It needs to take a firmer stand. It needs some cojones. We have seen this movie before, and it ends badly.” (BTW I don't "keep saying this". It was my first comment on the topic. You probably confused me with milkshakes or dalke.) [1] http://www.imf.org/external/pubs/ft/scr/2009/cr0907.pdf http://www.imf.org/external/pubs/ft/scr/2009/cr0907.pdf