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Monday, October 24, 2016

by Cora Currier, ProPublica.


This week a Senate investigation detailed that HSBC had lax controls against money-laundering and often ignored warnings about clients with ties to drug cartels and terrorists.

The bank is also reportedly nearing a settlement with the Justice Department, which has two criminal investigations into whether HSBC was complicit in money-laundering and tax evasion.The federal regulator that should have been keeping tabs on all this, the Office of the Comptroller of the Currency, also came under fire for “systemic weaknesses” in its oversight of banks’ anti-money laundering procedures.

The report reaches back more than a decade, and in testimony in front of the Senate this week, the bank apologized and vowed it has recently overhauled its anti-money-laundering efforts. The bank’s head of compliance stepped down this week. But the Senate report notes that HBSC made similar promises of reform back in 2003 when it was cited by regulators for poor oversight of suspicious transactions. HSBC declined to comment further on the report or on the DOJ’s ongoing investigation.

There are lot of blunders and blind spots detailed in the Senate’s 335-page takedown. Here’s a rundown — in each instance, we’ve linked to the relevant page in the report.

17,000: The backlog of unreviewed, potentially suspicious activity alerts at HSBC’s U.S. arm as uncovered by government regulators in 2010.

200: Number of compliance staff in bank’s U.S. branch between 2006 and 2009, of which a smaller group was charged with making sure the bank was following anti-money-laundering rules. HBUS had millions of accounts, and more than 16,000 employees overall, and according to the report, kept compliance staff small as a cost-cutting measure.Members of the anti-money-laundering group told investigators that understaffing was a key problem.

85: Number of problems with the anti-money-laundering efforts at bank’s U.S. arm red-flagged by the OCC between 2005 and 2010. That was a third more than the next-closest major bank.

0: number of enforcement actions the OCC took in that time period.

3: number of years, from 2006 to 2009, for which HSBC’s U.S. branch didn’t do any money-laundering monitoring for transactions with HSBC banks in other countries.

15 billion: Total value of U.S. dollar bills (as in paper money) the bank accepted as part of bulk-cash transactions from foreign HSBC banks during that period, with no anti money-laundering controls.

Concerns about HBMX, the bank’s Mexican arm

7 Billion: U.S. dollars exported from 2007-2008 from HBMX accounts to HSBC’s U.S. accounts. At the time, both American and Mexican officials raised concerns that such a volume was only possible if it included illegal drug money.

1: Rank of HBMX in repatriation of U.S. dollars from Mexico for those years. HBMX is only the 5th largest bank in Mexico.

50,000: Number of clients in 2008 with U.S. dollar accounts at an HBMX shell operation in the Cayman Islands.

75: Estimated percentage of those accounts for which HBMX had incomplete information on the account holder.

15: Estimated percentage of such accounts for which the bank had no account holder information. (In 2009, HBMX closed 9,000 Cayman U.S. dollar accounts, but continues to allow new ones to be opened there).

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  • howa4x

    Banks are amoral to begin with. They are there to accumulate and hide the largess of the few, legal or not. This is what is going on with Romney who had bank accounts in Bermuda, The Caymans and Switzerland. All hidden from the watchful eyes of the Federal government. Anybody see any similarites?

  • ObozoMustGo

    One must certainly wonder whether or not the laundered funds for the drug cartels were used to purchase the illegal guns in Obozo’s illegal Fast & Furious gun running scheme?

    Here’s another money laundering scheme to ponder. DemocRAT politicians tax the people. They use those tax dollars to pay their workers, the public employees. The public employees are forced into a union. The union forces them to pay dues out of wages paid for by taxpayers. The union then takes those dues, donate it back to the DemocRAT politicians and use it for ads and organizing on behalf of those DemocRAT politicians and against the interests of the taxpayers. This is clearly a money laundering scheme.

    Public employee unions are just as evil as crooked bankers. But the most evil class are crooked politicians and bureaucrats.

    Have a nice weekend!

    • dtgraham

      You know what your posts read like any more Obozo? They read like they’re written by Stephen Colbert. You’re just a caricature of modern American conservatism. Few would believe the nonsense that you post. I don’t even think that you really believe it. This is just snark isn’t it? You’re not really serious are you?

      Here’s something for you to digest. There’s a wildly popular article on the net right now called “Hard headed Socialism”, “How Canada became richer than the U.S.” I clearly remember those days. My partner and I had to make serious adjustments when the Mulroney gov’t got replaced by the Chretien/Martin Liberals, particularly in regards to capital gains taxation. I remember late nights reading Paul Martin budgets. He was instrumental in keeping Canada from joining the trend, led by our U.S. friend, even as Canadian bankers were imploring him to let them join the proprietary derivative trading club. He wouldn’t have anything to do with it and he kept Canadian banking separate and vanilla.

      That man was a visionary. He saved us and I will never forget him for that. I’m a New Democrat (democratic socialist) and Martin is a Liberal. Paul Martin gave me a respect for the Liberal Party that I never had before. He really reached out to New Democrats in the 2006 election, and reminded us of our similarities, and many of us voted for him. I do have some problems, factually, with some of that article. Martin raided rainy day funds from various social programs, and raised taxes, to balance the budget and pay down the debt. There was no huge slashing of social programs that I recall, but it’s still an interesting read. I recommend it Obozo.

      • ObozoMustGo

        dt: how is my Canadian friend doing? I hope you are well. Of course there’s snarkiness in the post. What do you expect? 🙂

        Have a nice day!

        • dtgraham

          Sorry for the snark, but it’s inspired. Hope you and your family had a great vacation Obozo. I guess I’m forgetting basic Canadian politeness. I tell you, I’ve met a number of people from the American midwest and south, and they were some of the finest gentlemen and ladies that I’ve ever met in my life. Very classy people.

          Tell you what. If the Winnipeg Jets don’t win the Stanley Cup this year, I hope your beloved Flyers win it all. There! Are we good now.

  • LadyDeb

    No wonder HSBC has been bought out by Capitol One?

  • onedonewong

    Where was the federal govt while all this was going on??? The taxpayers spend BILLIONs on govt oversight of banks and we would be better off throwing it down a dark hole for all the good it does

  • Why wasn’t this bank charged with criminal acts back in the years before 2008 and shut down? From this report it tagged more than once between 2001 and 2008 for illegal transactions should have been shut down. Why wasn’t it MS Rice and the fellow before you(can’t recall his name) since you two were in charge of the Justice Department in these years.? Was the bank a big contributor to the Republican election chest?

    • dtgraham

      Why? Because the United States government has now been purchased by big money special interests. Slightly off topic, but the U.S. gov’t not long ago announced new tougher rules for banks that traded more than 100 million dollars in derivative swaps annually. The banking lobby swung into action. The result? Only banks that traded more than 8 billion dollars would be subject to oversight, leaving 85% of derivative players outside of the reach of regulators.