Bank Takes Drug Money, Gets Handslap

Money Laundering

The “surprises “just keep coming, don’t they?

HSBC Holdings Plc (HSBA)’s Mexican branches had become so well-known to drug traffickers as the place to launder proceeds from illicit sales that cartels began using special boxes to speed transactions, U.S. prosecutors said.

From 2006 to 2010, the Sinaloa cartel in Mexico and the Norte del Valle Cartel in Columbia moved more than $881 million in proceeds through HSBC’s U.S. unit, said Lanny Breuer, assistant attorney general for the U.S. Justice Department’s criminal division. Breuer, along with U.S. Attorney Lorretta Lynch in Brooklyn, New York, announced yesterday the bank had agreed to pay at least $1.9 billion to settle money laundering probes.

Number of banksters in prison?  Zero.

Who will “pay” this fine?  HSBC’s customers and shareholders, neither of whom did anything wrong.

“We accept responsibility for our past mistakes,”Gulliver said in a statement. “We have said we are profoundly sorry for them, and we do so again. The HSBC of today is a fundamentally different organization from the one that made those mistakes.”

I’m sure they are profoundly sorry — that they got caught.

Treasury called this “egregious breakdown in anti-money laundering compliance.”

I’d say so, when the dopers are sizing the packages they deposit so as to insure they fit through the deposit windows.

That’s not suspicious, is it?

The bank engaged in payment practices that violated U.S. law and interfered with economic sanctions, such as forwarding messages to U.S. banks that said that an HSBC affiliate was the ordering institution and not individuals or entities subject to U.S. sanctions, Cohen said.

At least once, HSBC told a bank in Iran how to format payment messages so the U.S. wouldn’t block or reject the transactions, Breuer said.

Oh, it’s better.  The government alleges that the bank intentionally circuvented the law.  Not that it looked the other way, but that itactively participated in the formatting of messages so as to evade surveilance.

The decision not to prosecute HSBC was a decision of the Justice Department and was influenced by factors including the impact of the probe on the company’s employees and the potential economic effect, Breuer said.

In other words if you get big enough and can threaten the government, you can do whatever the hell you want and at worst, if you get caught, you might pay a fine.

That’s a nice business arrangement if you can manage to be one of the few able to abuse it.

We will have exactly no progress on repairing what’s wrong with our financial system until this sort of behavior leads to handcuffs and revoked charters.

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