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I find it hilarious that they take this guy down and nobody from HSBC does a perp walk. I guess it's who you know and how much you can pay off, ya? This has eve

I find it hilarious that they take this guy down and nobody from HSBC does a perp walk. I guess it's who you know and how much you can pay off, ya? This has everything to do with the threat Bitcoin represents. HSBC literally paid a 2 Billion dollar fine against specifically money laundering on behalf of organized drug cartels. The investigation took years and not a single HSBC employee has done a perp walk. Oh, and since when does selling BTC anywhere, including Silk Road, constitute a crime? It's what you buy with BTC, or any other currency, that is the crime.

kbenson 13y ago
The investigation took years and not a single HSBC employee has done a perp walk. The large companies obviously know how to avoid accountability by eliminating, or never creating paper trails. Oh, and since when does selling BTC anywhere, including Silk Road, constitute a crime? The article says money laundering, so there's probably more to it than that. Eterm's review seems to support that.
- deleted 13y ago
  [deleted]
- jnbiche 13y ago
  Wrong, there were plenty of paper trails in the HSBC case. The large companies know how to avoid accountability by paying off powerful politicians.
  - kbenson 13y ago
    While no doubt true in some cased, I prefer the more optimistic view that the system is just somewhat broken with respect to bringing larger entities to account for their errors. I find that problem to be more tractable than eliminating political corruption, while possibly also making paying off politicians to avoid prosecution more dangerous for both involved parties.
  - deleted 13y ago
    [deleted]
- jellicle 13y ago
  No; the opposite. The large companies COMPLY with all the paperwork registration and reporting requirements, at least in the general case. Then when some SPECIFIC case comes up where the paperwork has not, perhaps, been filed correctly or accurately, they claim it is a rare exception from the general rule that they comply with all paperwork and reporting requirements, they'll rectify it right away, and so on. The typical bitcoin "fuck the Man he can't catch me!" attitude is the precise opposite of the attitude that HSBC et al. have adopted, which is one of ingratiating compliance.
  - patio11 13y ago
    Yes. Some of the most damning evidence in the HSBC investigation was internal documents by the people whose only job was making sure HSBC complied with AML laws -- departments full of them! -- were saying things like, paraphrased from memory, "Why are we accepting this business? We have seen this movie before. It will end badly." or "You [people at one branch of HSBC] need to immediately stop [a particular banking practice] because it is certainly out of compliance with HSBC global policies and relevant AML laws in [our branch's] jurisdiction. You need to fix this, immediately." And then it didn't get fixed, which is why they had to pay two billion dollars. Edit: The movie quote part of a longer email excerpted extensively in the Congressional report. It's so amazing that I think I'll just copy/paste the whole excerpt. A number of items jump out from your most recently weekly report (02JUL-06JUL) but everything pales in comparison with the ML items on page 4. It looks like the business is still retaining unacceptable risks and the AML committee is going along after some initial hemming and hawing. I am quite concerned that the committee is not functioning properly. Alarmed, even. I am close to picking up the phone to your CEO. [Redacted by HSBC] looks like another [Unimed306] type of situation – what on earth is an ‘assumption responsibility letter’ and how would it protect the bank if the client is a money launderer? Please note that you can dress up the USD10 million to be paid … to the US authorities as an ‘economic penalty’ if you wish but a fine is a fine is a fine, and a hefty one at that. What is this, the School of Low Expectations Banking? (“We didn’t go to jail! We merely signed a settlement with the Feds for $ 10 million!”) … So, [Unimed307] is strike one. [Redacted by HSBC] is strike two. Let’s now look at strike three. (I hope you like baseball.) The same person who is giving the sancrosanct ‘assumption responsibility letter’ for [Redacted by HSBC] … is being asked by the CEO to explain why he retained the [Casa De Cambio Puebla308] relationship after USC11 million was seized by the authority in [Puebla309] account with Wachovia in Miami. What?! The business was okay with this? The 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.” 7/17/2007 email from HSBC John Root to HBMX Ramon Garcia, with copies to Susan Wright, David Bagley, and Warren Leaming, “Weekly Compliance Report 02JUL-06JUL07,” HSBC OCC 8875925-927.
- bonemachine 13y ago
  The large companies obviously know how to avoid accountability by eliminating, or never creating paper trails. Unfortunately it doesn't seem that it was a lack of a paper trail that kept the principals of HSBC out of orange pajamas. But rather an apparent perception on the part of the government that they were essentially beholden to HSBC for the sake of, well, it's hard to say precisely (but you can chose whether you want to take the AG's concern about "jobs" at face value or not): In December 2012, Assistant U.S. Attorney General Lanny Breuer suggested that the U.S. government might resist criminal prosecution of HSBC which could lead to the loss of the bank's U.S. charter. He stated, "Our goal here is not to bring HSBC down, it's not to cause a systemic effect on the economy, it's not for people to lose thousands of jobs." Source: http://money.cnn.com/2012/12/12/news/companies/hsbc-money-laundering/index.html http://money.cnn.com/2012/12/12/news/companies/hsbc-money-la... See also: http://www.theguardian.com/business/2013/may/30/treasury-department-hsbc-standard-chartered http://www.theguardian.com/business/2013/may/30/treasury-dep...
patio11 13y ago
Oh, and since when does selling BTC anywhere, including Silk Road, constitute a crime? It's what you buy with BTC, or any other currency, that is the crime. Since September 23, 1994, when they passed the Money Laundering Suppression Act. http://www.law.cornell.edu/usc-cgi/get_external.cgi?type=pubL&target=103-325 http://www.law.cornell.edu/usc-cgi/get_external.cgi?type=pub... See Title 18 Section 1960: http://www.law.cornell.edu/uscode/text/18/1960 http://www.law.cornell.edu/uscode/text/18/1960 (a) Whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business, shall be fined in accordance with this title or imprisoned not more than 5 years, or both. There are three prongs which can get you classified as an unlicensed MSB, and they are evaluated with an OR gate not an AND gate. The slam-dunk one is: [You are an unlicensed MSB if you] fail[] to comply with the money transmitting business registration requirements under section 5330 of title 31, United States Code, or regulations prescribed under such section; Lets see if buying Bitcoins and reselling them to effect money movements qualifies: (1) Money transmitting business.— The term “money transmitting business” means any business other than the United States Postal Service which— (A) provides check cashing, currency exchange, or money transmitting or remittance services, or issues or redeems money orders, travelers’ checks, and other similar instruments or any other person who engages as a business in the transmission of funds, including any person who engages as a business in an informal money transfer system or any network of people who engage as a business in facilitating the transfer of money domestically or internationally outside of the conventional financial institutions system Well, yep, that is exactly what this guy's business is. This is why the affadavit says "I checked with FinCEN. Nobody with that name is now or was ever registered with them." This makes an absolutely airtight, slam-dunk case for a federal felony. Can I again recommend to HN that if someone against posts a blog saying "Hey it's really easy to make money by straw-purchasing coins on Coinbase for buyers from LocalBitcoins" that you really, really think twice about doing that?
- jnbiche 13y ago
  You're right, obviously. But the real question is: do you think all these money laundering laws are a good idea?
  - 13y ago
drcode 13y ago
I'm guessing HSBC had a few more layers of indirection of lawyers and underlings with autonomy that made it hard for the government to show criminal intent by a specific individual. I think the lack of perp walks for HSBC can easily be explained as simple incompetence, not corruption (though you never know, of course...)
pnathan 13y ago
This is a classic Whataboutism[1], used to derail discussion. In this case, the topic is BTCKing et al, and this post I am responding to is a "What about HSBC". [1] https://en.wikipedia.org/wiki/Whataboutism https://en.wikipedia.org/wiki/Whataboutism
- TomSawyer 13y ago
  Also: http://en.wikipedia.org/wiki/And_you_are_lynching_Negroes http://en.wikipedia.org/wiki/And_you_are_lynching_Negroes
- camelite 13y ago
  The charge of whataboutism hinges upon the irrelevance of the counter-charge. Since the two are being accused here of exactly the same crime, the charge fails. Not to mention that, from reading the wikipedia article, the inspiration for the term comes from a situation where the counter-charge comes from the initially accused party, which is not the case here.
  - tptacek 13y ago
    No it doesn't. Read some articles about it. The problem with Whataboutism is that two wrongs don't make a right, and that "you're a hypocrite" is a very superficial rebuttal to an otherwise valid criticism.
    - kentrado 13y ago
      There's nothing to rebut. The guy is pointing out an inconsistency in the way law operates. Fairness hinges on consistency. He is identifying the whole affair as unfair which is a valid statement to make. The "you are hypocrite" fallacy only applies when it is in the form of "you are a hypocrite, therefore what you are saying is false".
    - deleted 13y ago
      [deleted]
    - camelite 13y ago
dredmorbius 13y ago
If it makes you feel any better, HSBC have been limiting withdrawals for the past few days. Suggesting a reserve shortage. http://www.bbc.co.uk/news/business-25861717 http://www.bbc.co.uk/news/business-25861717 They're now claiming this was a "policy change". http://dealbook.nytimes.com/2014/01/26/hsbc-apologizes-after-cash-withdrawal-issue-in-britain/ http://dealbook.nytimes.com/2014/01/26/hsbc-apologizes-after...
- wavefunction 13y ago
  It doesn't... :( And I don't even do business with them! (I do see how tightly integrated the global finance industry is ;)
- fancyketchup 13y ago
  Come on, HN, you're better than this. The policy change is specifically limited to CASH withdrawals. Notice that nowhere does the BBC story even hint that HSBC limited withdrawals via wire transfer, personal check, or cashier's check (all of which are traceable, unlike cash).
  - yapcguy 13y ago
    Fractional reserve banking guarantees that banks always have a shortfall of cash! ;-)
    - dredmorbius 13y ago
      Not a shortfall. They're in short position on cash though. Law of large numbers says that most people don't need their deposits most of the time. Lender of last resort (a/k/a central banking) says that a bank can always get more cash if it needs to, though it may risk insolvency. The depositors aren't at risk (subject to limits of deposit insurance, for private depositors, and yes, commercial depositors may, IIUC, be SOL, but businesses don't tend to stockpile cash reserves as people do). One interpretation of HSBC's actions is that its reserves are falling and it needs to do what it can to shore up its balance sheets by preventing withdrawals. Again: ordinary private depositors should have limited concerns. It'll be interesting to see what develops over the next few weeks. Possibly months.
Guvante 13y ago
If he had looked the other way and not investigated he would probably have walked too. If someone at HSBC had investigated what was going on, found out it was drug related, and then actively encouraged them to continue then they would probably be facing criminal charges too. Remember he didn't just turn a blind eye, he helped out.
bonemachine 13y ago
Oh, and since when does selling BTC anywhere, including Silk Road, constitute a crime? Shrem, at least, wasn't charged with "selling BTC" but for violating this thing known as the Bank Secrecy Act. As it says in, you know, the article that was linked to.

kbenson 13y ago

The investigation took years and not a single HSBC employee has done a perp walk. The large companies obviously know how to avoid accountability by eliminating, or never creating paper trails. Oh, and since when does selling BTC anywhere, including Silk Road, constitute a crime? The article says money laundering, so there's probably more to it than that. Eterm's review seems to support that.

deleted 13y ago
[deleted]
jnbiche 13y ago
Wrong, there were plenty of paper trails in the HSBC case. The large companies know how to avoid accountability by paying off powerful politicians.
- kbenson 13y ago
  While no doubt true in some cased, I prefer the more optimistic view that the system is just somewhat broken with respect to bringing larger entities to account for their errors. I find that problem to be more tractable than eliminating political corruption, while possibly also making paying off politicians to avoid prosecution more dangerous for both involved parties.
- deleted 13y ago
  [deleted]
jellicle 13y ago
No; the opposite. The large companies COMPLY with all the paperwork registration and reporting requirements, at least in the general case. Then when some SPECIFIC case comes up where the paperwork has not, perhaps, been filed correctly or accurately, they claim it is a rare exception from the general rule that they comply with all paperwork and reporting requirements, they'll rectify it right away, and so on. The typical bitcoin "fuck the Man he can't catch me!" attitude is the precise opposite of the attitude that HSBC et al. have adopted, which is one of ingratiating compliance.
- patio11 13y ago
  Yes. Some of the most damning evidence in the HSBC investigation was internal documents by the people whose only job was making sure HSBC complied with AML laws -- departments full of them! -- were saying things like, paraphrased from memory, "Why are we accepting this business? We have seen this movie before. It will end badly." or "You [people at one branch of HSBC] need to immediately stop [a particular banking practice] because it is certainly out of compliance with HSBC global policies and relevant AML laws in [our branch's] jurisdiction. You need to fix this, immediately." And then it didn't get fixed, which is why they had to pay two billion dollars. Edit: The movie quote part of a longer email excerpted extensively in the Congressional report. It's so amazing that I think I'll just copy/paste the whole excerpt. A number of items jump out from your most recently weekly report (02JUL-06JUL) but everything pales in comparison with the ML items on page 4. It looks like the business is still retaining unacceptable risks and the AML committee is going along after some initial hemming and hawing. I am quite concerned that the committee is not functioning properly. Alarmed, even. I am close to picking up the phone to your CEO. [Redacted by HSBC] looks like another [Unimed306] type of situation – what on earth is an ‘assumption responsibility letter’ and how would it protect the bank if the client is a money launderer? Please note that you can dress up the USD10 million to be paid … to the US authorities as an ‘economic penalty’ if you wish but a fine is a fine is a fine, and a hefty one at that. What is this, the School of Low Expectations Banking? (“We didn’t go to jail! We merely signed a settlement with the Feds for $ 10 million!”) … So, [Unimed307] is strike one. [Redacted by HSBC] is strike two. Let’s now look at strike three. (I hope you like baseball.) The same person who is giving the sancrosanct ‘assumption responsibility letter’ for [Redacted by HSBC] … is being asked by the CEO to explain why he retained the [Casa De Cambio Puebla308] relationship after USC11 million was seized by the authority in [Puebla309] account with Wachovia in Miami. What?! The business was okay with this? The 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.” 7/17/2007 email from HSBC John Root to HBMX Ramon Garcia, with copies to Susan Wright, David Bagley, and Warren Leaming, “Weekly Compliance Report 02JUL-06JUL07,” HSBC OCC 8875925-927.
bonemachine 13y ago
The large companies obviously know how to avoid accountability by eliminating, or never creating paper trails. Unfortunately it doesn't seem that it was a lack of a paper trail that kept the principals of HSBC out of orange pajamas. But rather an apparent perception on the part of the government that they were essentially beholden to HSBC for the sake of, well, it's hard to say precisely (but you can chose whether you want to take the AG's concern about "jobs" at face value or not): In December 2012, Assistant U.S. Attorney General Lanny Breuer suggested that the U.S. government might resist criminal prosecution of HSBC which could lead to the loss of the bank's U.S. charter. He stated, "Our goal here is not to bring HSBC down, it's not to cause a systemic effect on the economy, it's not for people to lose thousands of jobs." Source: http://money.cnn.com/2012/12/12/news/companies/hsbc-money-laundering/index.html http://money.cnn.com/2012/12/12/news/companies/hsbc-money-la... See also: http://www.theguardian.com/business/2013/may/30/treasury-department-hsbc-standard-chartered http://www.theguardian.com/business/2013/may/30/treasury-dep...

patio11 13y ago

Oh, and since when does selling BTC anywhere, including Silk Road, constitute a crime? It's what you buy with BTC, or any other currency, that is the crime. Since September 23, 1994, when they passed the Money Laundering Suppression Act. http://www.law.cornell.edu/usc-cgi/get_external.cgi?type=pubL&target=103-325 http://www.law.cornell.edu/usc-cgi/get_external.cgi?type=pub... See Title 18 Section 1960: http://www.law.cornell.edu/uscode/text/18/1960 http://www.law.cornell.edu/uscode/text/18/1960 (a) Whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business, shall be fined in accordance with this title or imprisoned not more than 5 years, or both. There are three prongs which can get you classified as an unlicensed MSB, and they are evaluated with an OR gate not an AND gate. The slam-dunk one is: [You are an unlicensed MSB if you] fail[] to comply with the money transmitting business registration requirements under section 5330 of title 31, United States Code, or regulations prescribed under such section; Lets see if buying Bitcoins and reselling them to effect money movements qualifies: (1) Money transmitting business.— The term “money transmitting business” means any business other than the United States Postal Service which— (A) provides check cashing, currency exchange, or money transmitting or remittance services, or issues or redeems money orders, travelers’ checks, and other similar instruments or any other person who engages as a business in the transmission of funds, including any person who engages as a business in an informal money transfer system or any network of people who engage as a business in facilitating the transfer of money domestically or internationally outside of the conventional financial institutions system Well, yep, that is exactly what this guy's business is. This is why the affadavit says "I checked with FinCEN. Nobody with that name is now or was ever registered with them." This makes an absolutely airtight, slam-dunk case for a federal felony. Can I again recommend to HN that if someone against posts a blog saying "Hey it's really easy to make money by straw-purchasing coins on Coinbase for buyers from LocalBitcoins" that you really, really think twice about doing that?

jnbiche 13y ago
You're right, obviously. But the real question is: do you think all these money laundering laws are a good idea?
- 13y ago

drcode 13y ago

I'm guessing HSBC had a few more layers of indirection of lawyers and underlings with autonomy that made it hard for the government to show criminal intent by a specific individual. I think the lack of perp walks for HSBC can easily be explained as simple incompetence, not corruption (though you never know, of course...)

pnathan 13y ago

This is a classic Whataboutism[1], used to derail discussion. In this case, the topic is BTCKing et al, and this post I am responding to is a "What about HSBC". [1] https://en.wikipedia.org/wiki/Whataboutism https://en.wikipedia.org/wiki/Whataboutism

TomSawyer 13y ago
Also: http://en.wikipedia.org/wiki/And_you_are_lynching_Negroes http://en.wikipedia.org/wiki/And_you_are_lynching_Negroes
camelite 13y ago
The charge of whataboutism hinges upon the irrelevance of the counter-charge. Since the two are being accused here of exactly the same crime, the charge fails. Not to mention that, from reading the wikipedia article, the inspiration for the term comes from a situation where the counter-charge comes from the initially accused party, which is not the case here.
- tptacek 13y ago
  No it doesn't. Read some articles about it. The problem with Whataboutism is that two wrongs don't make a right, and that "you're a hypocrite" is a very superficial rebuttal to an otherwise valid criticism.
  - kentrado 13y ago
    There's nothing to rebut. The guy is pointing out an inconsistency in the way law operates. Fairness hinges on consistency. He is identifying the whole affair as unfair which is a valid statement to make. The "you are hypocrite" fallacy only applies when it is in the form of "you are a hypocrite, therefore what you are saying is false".
  - deleted 13y ago
    [deleted]
  - camelite 13y ago

dredmorbius 13y ago

If it makes you feel any better, HSBC have been limiting withdrawals for the past few days. Suggesting a reserve shortage. http://www.bbc.co.uk/news/business-25861717 http://www.bbc.co.uk/news/business-25861717 They're now claiming this was a "policy change". http://dealbook.nytimes.com/2014/01/26/hsbc-apologizes-after-cash-withdrawal-issue-in-britain/ http://dealbook.nytimes.com/2014/01/26/hsbc-apologizes-after...

wavefunction 13y ago
It doesn't... :( And I don't even do business with them! (I do see how tightly integrated the global finance industry is ;)
fancyketchup 13y ago
Come on, HN, you're better than this. The policy change is specifically limited to CASH withdrawals. Notice that nowhere does the BBC story even hint that HSBC limited withdrawals via wire transfer, personal check, or cashier's check (all of which are traceable, unlike cash).
- yapcguy 13y ago
  Fractional reserve banking guarantees that banks always have a shortfall of cash! ;-)
  - dredmorbius 13y ago
    Not a shortfall. They're in short position on cash though. Law of large numbers says that most people don't need their deposits most of the time. Lender of last resort (a/k/a central banking) says that a bank can always get more cash if it needs to, though it may risk insolvency. The depositors aren't at risk (subject to limits of deposit insurance, for private depositors, and yes, commercial depositors may, IIUC, be SOL, but businesses don't tend to stockpile cash reserves as people do). One interpretation of HSBC's actions is that its reserves are falling and it needs to do what it can to shore up its balance sheets by preventing withdrawals. Again: ordinary private depositors should have limited concerns. It'll be interesting to see what develops over the next few weeks. Possibly months.

Guvante 13y ago

If he had looked the other way and not investigated he would probably have walked too. If someone at HSBC had investigated what was going on, found out it was drug related, and then actively encouraged them to continue then they would probably be facing criminal charges too. Remember he didn't just turn a blind eye, he helped out.

bonemachine 13y ago

Oh, and since when does selling BTC anywhere, including Silk Road, constitute a crime? Shrem, at least, wasn't charged with "selling BTC" but for violating this thing known as the Bank Secrecy Act. As it says in, you know, the article that was linked to.