Reporting on the Mexican Cartel Drug War

HSBC Allowed Narcos To Launder Billions

Tuesday, July 17, 2012 |

Borderland Beat    


(AP)Europe's largest bank had lax controls that allowed Mexican drug cartels to launder billions of dollars through its U.S. operations for seven years, a Senate investigation found.

The Senate Permanent Subcommittee on Investigations extensive report on HSBC Holdings PLC also says U.S. regulators knew that the bank had a poor system to detect problems but failed to take action.

In addition, some bank affiliates skirted U.S. government bans against financial transactions with Iran and other countries, according to the report. And HSBC's U.S. division provided money and banking services to some banks in Saudi Arabia and Bangladesh believed to have helped fund al Qaeda and other terrorist groups, the report said.

The panel released the report Monday ahead of a Tuesday hearing on the topic. HSBC released a statement saying its executives will offer a formal apology at the hearing.

"We will apologize, acknowledge these mistakes, answer for our actions and give our absolute commitment to fixing what went wrong," the bank said in a statement.

The U.S. Justice Department said that it is conducting a criminal investigation into HSBC's operations but declined to confirm that the bank is in settlement talks.
HSBC's net income last year was $16.8 billion. It operates in about 80 countries around the world. Its U.S. division is among the top 10 banks operating in the United States. It has assets of roughly $210 billion in its U.S. operations.

Money laundering takes profits from the trafficking of drugs, arms or other illicit activities and passes them through bank accounts to disguise the illegal activity.
  
The bank used its U.S. operation as a "gateway" into the U.S. financial system for other HSBC affiliates, Sen. Carl Levin, D-Mich., the subcommittee's chairman, told reporters Monday. Because of lax controls against money laundering, HSBC Bank USA "exposed the United States to Mexican drug money" and other suspicious funds, Levin said.
The report says the drug cartels laundered money through the bank's U.S. division from 2002 through 2009.
The bank said in its statement that it changed its senior management last year and has made changes to strengthen its compliance with rules to prevent money laundering. .

"We ... recognize that our controls could and should have been stronger and more effective in order to spot and deal with unacceptable behavior," the statement said.
Sen Levin  blasted the federal agency supervising the bank's U.S. operations, the Office of the Comptroller of the Currency. He said the agency "tolerated" HSBC's weak controls against money laundering for years.
Thomas Curry, who heads the Office of the Comptroller of the Currency, will also testify at Tuesday's hearing.
Compliance with anti-money laundering laws "is crucial to our nation's efforts to combat criminal activity and terrorism," said Curry in a statement. He said the agency expects banks to have adequate programs in place to comply with the laws.


Not Fined

HSBC's Stuart Guliver admits "mistakes"
 Global banking giant HSBC and its U.S. affiliate exposed the U.S. financial system to a wide array of money laundering, drug trafficking, and terrorist financing risks due to poor anti-money laundering (AML) controls, a Senate Permanent Subcommittee on Investigations probe has found.
The important word in there, the vital word, is “risks”.
“In an age of international terrorism, drug violence in our streets and on our borders, and organized crime, stopping illicit money flows that support those atrocities is a national security imperative,” said Sen. Carl Levin, D-Mich., subcommittee Chairman. “HSBC used its U.S. bank as a gateway into the U.S. financial system for some HSBC affiliates around the world to provide U.S. dollar services to clients while playing fast and loose with U.S. banking rules. Due to poor AML controls, HBUS exposed the United States to Mexican drug money, suspicious travelers cheques, bearer share corporations, and rogue jurisdictions. The bank’s federal bank regulator, the OCC, tolerated HSBC’s weak AML system for years. If an international bank won’t police its own affiliates to stop illicit money, the regulatory agencies should consider whether to revoke the charter of the U.S. bank being used to aid and abet that illicit money.”
The important word out of Senator Levin’s mouth there is “exposed”.
HSBC did not have sufficiently robust internal audit and verification systems to be able to prove that the transactions it was undertaking were not money laundering, terrorist financing or aiding the financing of the drugs trade. This is, and I’m sure you will agree, rather different from actually allowing or doing any of those things
Those things may even have happened as well: but that isn’t why HSBC has been fined. Their paperwork was inadequate: that is why they were fined.
Stepping Up the Settlement To Move To The Criminal Investigation

The Justice Department and HSBC Holdings HBC -0.30%PLC are accelerating settlement talks to resolve a criminal probe into laundering of drug-cartel and other money, according to people familiar with the investigation.
A settlement of the money-laundering investigation is near and could come within weeks, according to these people. Among the allegations Justice Department prosecutors have focused on, according to people familiar with the criminal probe, is whether bank officials were complicit in laundering by drug cartels by allowing suspicious money to be hidden in flows of bulk cash between the U.S. and Mexico.
For further information link HERE, Wall Street Journal

See Athena's article on BB forumHERE

Sources: AP, Forbes, Bloomberg, WSJ

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33 Borderland Beat Comments:

Anonymous said...

where is the loud condemnation of this bank from our American readers of this blog ?

if it was a mexican bank the feathers would fly

Anonymous said...

Money smoth. Things no criminal charges and forget the names and agencies doing the lavado de dinero which cartels ? And business?

Anonymous said...

@July 17, 2012 8:03 AM

This bank operates in US withing US laws (mostly), like every US bank.

Anonymous said...

8:03 AM Reply...because if this was happening in Mexico it wouldn't have been exposed. I note they have been laundering money up until 2009....I would think the US Justice has been investigation this scheme since that year.

TheHutMaster said...

All these criminals must use the same press writers. Their comments are always the same.

We are sorry (you caught us cheating) we will look into our mistakes.

I say Horse puckie. Jail these criminals TODAY.
Wells Fargo, JPM Chase, BOA,GMAC, and all othee mortgage servicers must be shut down and jailed for their fraud and overall abuse of the US Citizen.

Anonymous said...

op - condemnation of a chinese/british bank by americans? I'm confused.

Anonymous said...

This is high treason

Anonymous said...

business as usual

Anonymous said...

This has been going on for a long time. What about Wells Fargo who cut two cashiers checks for two Boeing jumbo jets with parts and support included, all bought by cartels? That was years ago and did anyone hear more about it? These banks were all bailed out by their buddy Obama, whom for some reason the "%99" rich kid crowd seem to want as their king, and now has all this cash they won't lend to hardly anyone. These banks should have been left to fail, just like GM and the rest of them who took the money. Everyone else in the US has to balance their accounts, but for some reason Washington and their buddies seem to not live in the same world as the rest of us. I don't agree with Romney on a number of social issues, but the guy knows how to make money instead of printing it and giving it to people who are too lazy to work.

Anonymous said...

Couldn't agree with you more. If anyone here tried to do the same, theyd send our asses to prison in no time. Always stepping on the little people

Anonymous said...

the global power of mr Guzman

Anonymous said...

So what? Everybody knows the world is corrupted..It's all about MONEY!!! Always has been, Always will be........Plus the "illegal drug money" created a lot of jobs (globally) and what is better for the global economy than drugs proceeds to feed the economy. Eg..hotels, restaurants,clothes, ect.... You either pay up to 40% to a crooked lawyer or accountant to launder your money or use global banks with a lesser percentage.....Everybody wins !!!!!Except for the dumbasses that are hooked on drugs......

Anonymous said...

Fuck all of them, Goldman Sachs fuck most of all with ur fancy bullshit money schems...taking adavantage of the system, run the economy in the ground with no liability, get paid a huge bonus, put it off-shore to not pay taxes, retire - FUCK YOU

Anonymous said...

if the americans here don't like their gov allowing banks to fuck the small guy all time while billonaire bankers can illegally profit from the slaughter of over a hundred thousand in mexico and get away with it then get your fat lazy asses off the couch and go do something about it. Something... anything. crying on the internet will accomplish ZERO. if you wont do anything about it then dont complain.

Anonymous said...

How does 10 years in prison plus interest sound fellas.....and if youhave an account there call them and ask em to refund all your interest for the last 12 months and when they tell you "that's impossible" transfer your funds ,mortgage,loans,ex.to another bank.

Anonymous said...

All that dirty money in offshore banks used for everything from drug trafficking, to tax evasion, and on to dirty political money, not to mention black op funding. It'll catch up to them all in one fashion or another. Putos.

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

im surprised they arent part owners of some EPL teams!

♠litobrito♠ said...

one after another..ALWAYS the bankers are the REAL criminals

Anonymous said...

An they think they can stop them!!!!!!

Anonymous said...

If you want to rob someone, own a bank. If you want to rob a nation, own several banks.
Sounds like someone should be charged with violation of the R.I.C.O. Act in this banking scheme. This gives a new meaning to "They laughed all the way to the bank".

Anonymous said...

correct me if i'm wrong please. but in reference specifically to the money laundering graphic, it doesn't have to be that complicated. you could just say that the drug dealer gave you a massage instead of weed and it would be legal. yay or nay?

Anonymous said...

Banks are just as corrupt as cartels.

Anonymous said...

Agreed

Anonymous said...

Agreed again. Corporations and banks etc have deep pockets to persuade policy. They are not perfectly protected from justice. Important to remember and don't give up hope or the opertunity to help with a positive change in our world.

Anonymous said...

I'm an American and I think that all involved should hang for this.

Anonymous said...

All this shady sh*t happens daily with the blessing of bank regulators who work for politicians.....it's all one big pile of CACA......public service is self service these days....

Anonymous said...

For some interesting additional info:

http://www.aljazeera.com/indepth/features/2012/06/201261515312418850.html

Anonymous said...

Corruption north of the border is just as bad as to the south ... it is just a different kind ... how else does the drugs once crossed the border find their way to the millions of consumers?

Anonymous said...

do an update to this. i think he has resigned.
HSBC official resigns after investigation
Bank execs apologize for weak oversight that led to illegal operations
Associated Press
Published 08:08 p.m., Tuesday, July 17, 2012

WASHINGTON — The head of compliance at Europe's largest bank resigned from his position and apologized Tuesday after a Senate investigation found HSBC had lax controls that exposed it to money laundering and terrorist financing.

David Bagley told the Senate investigations panel that he will remain at the London-based bank in a new role.

Read more: http://www.timesunion.com/business/article/HSBC-official-resigns-after-investigation-3714418.php#ixzz210khuZYe

Anonymous said...

"where is the loud condemnation of this bank from our American readers of this blog ?
if it was a mexican bank the feathers would fly"?

You were the first poster you fuckin clown?So how would you know about the opinions coming out on this topic?Have a look now,is that good enough?

Anonymous said...

C,mon man,this is absolutely no surprise to anyone.
So why are we getting upset,we are the ones that allow this shit to go on.Banks use our money,and charge us all kinds of shit for the privilege.Banks should be paying us for fucks sake,it is the best way to steal millions and you may not even get jail time for it,,,,,after all who are they hurting?Stop using certain banks and put them out of business.We won't put up with your shit,and the huge bonus's you give your execs for doing a bad job.

Anonymous said...

If any business starts. losing money and doesn't make money, it goes out of business. We tax payers bailed out banks and financial firms with the U.S. gov. bank bailout of 2008. That was a taxpayer bailout of $ 700 billion of firms that would otherwise would have. failed. To add insult to injury, some ceos paid themselves with that money.

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