Earlier quoted context omitted.
They were not convicted of anything, if you're referring to the Mexico/Iran story which I guess you are. You heard the US Government's side of the story. The USG agreed not to take the charges to court as long as HSBC accepted big fines and didn't say anything (i.e. didn't attempt to defend itself in public). So there was never any court case or any judicial process involved. If you hear only the government's story a…
You're attempting to imply that HSBC was an innocent party, and that's simply nonsense. HSBC was fined because it failed to follow the rules put in place to prevent money laundering. Often it completely failed to make any attempt to follow those rules. E.g. "...The monitor’s findings described several incidents, among them one where an HSBC branch in Sinaloa, a Mexican state that has experienced much drug-related vio…
Not quite. I said explicitly that all banks are guilty of violating AML laws, because it's impossible not to be guilty.
You then go ahead and prove my point: someone turned up with some cash, and gave an explanation of where he got it. The banker in question accepted the story and the monitor found it to be "clearly suspicious".
"Suspicious" is such a vague standard that nobody can ever comply with such laws. There will always be transactions that are debatable, grey area, or turn out to be suspicious in hindsight but weren't at the time. Your own example proves this: apparently if you ran a bank nobody would ever be able to open an account and deposit money there, which is a problem, because being able to do that is kind of the point of having banks.
The story you link to admits as such in the very next paragraph after the shrimp farmer quote:
Compliance officials who must decide whether a bank should open an account or extend a loan can face a tough job, having to make the call based on the movement of money through existing accounts or sketchy data such as local knowledge and material found online. Regulators want to see signs that compliance departments are at least flagging suspicious transactions and customers. That didn’t appear to happen in the Sinaloa matter.
Maybe people open accounts that way in this part of Mexico all the time? Heck, maybe the person who opened the account thought it was suspicious but was afraid of turning up inconveniently dead if he turned the guy down. It's very easy for Americans to sit around on their Aeron chair in nice safe Washington DC and criticise people on the front line of the drug war for not trying hard enough.
But I'm not sure I'm arguing with a reasonable person. Your response to "the banking system might collapse" is "that would hardly be a bad thing", which is a position so far out that I doubt you will ever change your mind. What's your intended alternative? Bitcoin?
That said, my focus in this thread has been on money laundering rules, not trading fraud.