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IIRC, there was so much cash to move, that the cartel made custom-sized, reusable tote boxes, that fit precisely through the teller windows. To not notice that

IIRC, there was so much cash to move, that the cartel made custom-sized, reusable tote boxes, that fit precisely through the teller windows. To not notice that, when you have continuous video of all teller windows? Further, bank software makes a distinction between different financial instruments, for instance, if you deposit $8K in cash, or in cheque, or in wire transfer the deposit information will capture that difference. Even $10 billion in 100s, per year, divided by say 200 days that a bank is open, is $50 million per day. That is, 500,000 x 100 dollar bills, being deposited and counted, each and every day the bank is open. Does it sound reasonable to you, that their software wouldn't record that, and it would seem shall we say "odd" with even minimal review of their bank branches? It would take multiple tellers an entire shift to count such money. EDIT to add: even counting 1000 bills per minute with high speed counters, you have 500 minutes, which is 20 minutes more than an 8 hour shift with no break.

zorrb 12y ago
Yeah, it is pretty hard to believe. Personal anecdote. About eight years ago I knew a guy who had a small diner in Michigan and the weekly deposits came out to be just under $10k, so $8700 this week, $9500 the next week. Nothing nefarious, that's just what it happened to be. I guess after three months of this the bank closed his business' account for "suspicious activity".
- mike_hearn 12y ago
  They thought he was "structuring". There's a $10k reporting limit for suspicious transactions. So obviously if you are doing something suspicious, you want to always go in under the limit. So now the real limit is lower than $10k and essentially arbitrary .... you really have no idea how you can use a bank account with cash without being classified as suspicious. Great system, huh.
  - harryh 12y ago
    Actually it does sound like a great system to not know exactly what being suspicious looks like. If the system was very precisely defined it would make it trivial for criminals to avoid suspicion by staying just on one side of a line.
mike_hearn 12y ago
IIRC, there was so much cash to move, that the cartel made custom-sized, reusable tote boxes, that fit precisely through the teller windows. To not notice that, when you have continuous video of all teller windows? When you only hear one side of the story (the US Government's side) it's easy to make a case that sounds damning. Firstly, it's not like people were turning up at banks with boxes helpfully labelled "DRUG MONEY". The point of money laundering is you have a reasonable explanation for where the cash is coming from. In this case the alledged cartel money was actually from companies that processed remittances. It's not entirely surprising if such companies move large amounts of cash. And having such boxes (probably provided by the bank themselves) would make a lot of sense for any bank with cash heavy clients. But moreover the US never managed to prove the money actually did come from cartels. Their case amounted to: there's lots of cash moving from Mexico to the USA via HSBC. It must obviously contain drug money. Therefore HSBC is guilty. There was also a sideshow related to transactions with Iran, caused by the fact that the USA was trying to impose sanctions on Iran globally but many of HSBCs international clients are not (theoretically) under US jurisdiction. Congress took a very strong "you're either with us or against us" line on this and banks (many of them, not just HSBC) got caught in the crossfire. The fact is that AML laws are so terrible every bank is guilty of violating them. You really cannot run a large bank without having some criminal clients and post PATRIOT Act, that's enough.
- eof 12y ago
  > But moreover the US never managed to prove the money actually did come from cartels. Their case amounted to: there's lots of cash moving from Mexico to the USA via HSBC. It must obviously contain drug money. Therefore HSBC is guilty. Mike, where do you get off? Rather.. where the hell are you coming from? Ad-hominem attacking Shrem for being related to the silk road and laundering money; and in the same thread defending HSBC with disinformation? What's your angle here. The case did not amount to anything like that. They were literally removing information on transactions that would warrant scrutiny, among many other things much more damning than 'there was a lot of money'.
rayiner 12y ago
So you have these bankers boxes. It's evidence, sure. Now you gotta put someone on the stand to testify about the boxes, and why someone sufficiently high up at HSBC should have known what those boxes meant and ignored it. Beyond a reasonable doubt. You could get that conviction, but you might not. When you're using circumstantial evidence like that, you need a lot of different things that point to the same result. And they didn't have that. It wasn't a slam dunk. Now, it's imaginable that if the same exact conduct happened with a small company run by an individual, they could've gotten the conviction. The reason is that when dealing with individuals, the alternative explanations are simply less plausible in creating reasonable doubt. It's easy for an HSBC executive to get on the stand and say: we just didn't know about those boxes--we have divisions in 100 countries and move trillions of dollars a year and it never popped up on the radar. With an individual where illegal transactions might be the bulk of the business, as was the case here, those alternative explanations are much less believable.

IIRC, there was so much cash to move, that the cartel made custom-sized, reusable tote boxes, that fit precisely through the teller windows. To not notice that, when you have continuous video of all teller windows? Further, bank software makes a distinction between different financial instruments, for instance, if you deposit $8K in cash, or in cheque, or in wire transfer the deposit information will capture that difference. Even $10 billion in 100s, per year, divided by say 200 days that a bank is open, is $50 million per day. That is, 500,000 x 100 dollar bills, being deposited and counted, each and every day the bank is open. Does it sound reasonable to you, that their software wouldn't record that, and it would seem shall we say "odd" with even minimal review of their bank branches? It would take multiple tellers an entire shift to count such money. EDIT to add: even counting 1000 bills per minute with high speed counters, you have 500 minutes, which is 20 minutes more than an 8 hour shift with no break.

zorrb 12y ago

Yeah, it is pretty hard to believe. Personal anecdote. About eight years ago I knew a guy who had a small diner in Michigan and the weekly deposits came out to be just under $10k, so $8700 this week, $9500 the next week. Nothing nefarious, that's just what it happened to be. I guess after three months of this the bank closed his business' account for "suspicious activity".

mike_hearn 12y ago
They thought he was "structuring". There's a $10k reporting limit for suspicious transactions. So obviously if you are doing something suspicious, you want to always go in under the limit. So now the real limit is lower than $10k and essentially arbitrary .... you really have no idea how you can use a bank account with cash without being classified as suspicious. Great system, huh.
- harryh 12y ago
  Actually it does sound like a great system to not know exactly what being suspicious looks like. If the system was very precisely defined it would make it trivial for criminals to avoid suspicion by staying just on one side of a line.

mike_hearn 12y ago

IIRC, there was so much cash to move, that the cartel made custom-sized, reusable tote boxes, that fit precisely through the teller windows. To not notice that, when you have continuous video of all teller windows? When you only hear one side of the story (the US Government's side) it's easy to make a case that sounds damning. Firstly, it's not like people were turning up at banks with boxes helpfully labelled "DRUG MONEY". The point of money laundering is you have a reasonable explanation for where the cash is coming from. In this case the alledged cartel money was actually from companies that processed remittances. It's not entirely surprising if such companies move large amounts of cash. And having such boxes (probably provided by the bank themselves) would make a lot of sense for any bank with cash heavy clients. But moreover the US never managed to prove the money actually did come from cartels. Their case amounted to: there's lots of cash moving from Mexico to the USA via HSBC. It must obviously contain drug money. Therefore HSBC is guilty. There was also a sideshow related to transactions with Iran, caused by the fact that the USA was trying to impose sanctions on Iran globally but many of HSBCs international clients are not (theoretically) under US jurisdiction. Congress took a very strong "you're either with us or against us" line on this and banks (many of them, not just HSBC) got caught in the crossfire. The fact is that AML laws are so terrible every bank is guilty of violating them. You really cannot run a large bank without having some criminal clients and post PATRIOT Act, that's enough.

eof 12y ago
> But moreover the US never managed to prove the money actually did come from cartels. Their case amounted to: there's lots of cash moving from Mexico to the USA via HSBC. It must obviously contain drug money. Therefore HSBC is guilty. Mike, where do you get off? Rather.. where the hell are you coming from? Ad-hominem attacking Shrem for being related to the silk road and laundering money; and in the same thread defending HSBC with disinformation? What's your angle here. The case did not amount to anything like that. They were literally removing information on transactions that would warrant scrutiny, among many other things much more damning than 'there was a lot of money'.

rayiner 12y ago

So you have these bankers boxes. It's evidence, sure. Now you gotta put someone on the stand to testify about the boxes, and why someone sufficiently high up at HSBC should have known what those boxes meant and ignored it. Beyond a reasonable doubt. You could get that conviction, but you might not. When you're using circumstantial evidence like that, you need a lot of different things that point to the same result. And they didn't have that. It wasn't a slam dunk. Now, it's imaginable that if the same exact conduct happened with a small company run by an individual, they could've gotten the conviction. The reason is that when dealing with individuals, the alternative explanations are simply less plausible in creating reasonable doubt. It's easy for an HSBC executive to get on the stand and say: we just didn't know about those boxes--we have divisions in 100 countries and move trillions of dollars a year and it never popped up on the radar. With an individual where illegal transactions might be the bulk of the business, as was the case here, those alternative explanations are much less believable.