HSBC's Money Laundering Scandal (2022)
investopedia.com
HSBC's Money Laundering Scandal (2022)
1–10 of 118 posts
Re: HSBC's Money Laundering Scandal (2022)
#2> In this case, HSBC provided money-laundering services of more than $881 million to various drug cartels including Mexico’s Sinaloa cartel and Colombia’s Norte del Valle cartel. This included bulk movements of cash from the bank's Mexican unit to the U.S., with little or no oversight of the transactions. It also conducted transactions with Iran, removing references to the country in an effort to conceal them.
Only $881m? Isn't that relative chump change given the size and scale of these ultra large global banks? I find it surprising they thought it was worth the risk, though humans being short-sighted is a tale as old as time.
Re: HSBC's Money Laundering Scandal (2022)
#3If nobody goes to jail, and the bank retains its licenses, then the fine is meaningless no matter how large. The fine is just seen as a poor investment, which is common in finance. They lost money, and move on to the next investment.
People need to go to jail for these transgressions, otherwise there is little disincentive.
Re: HSBC's Money Laundering Scandal (2022)
#4> In this case, HSBC provided money-laundering services of more than $881 million to various drug cartels including Mexico’s Sinaloa cartel and Colombia’s Norte del Valle cartel. This included bulk movements of cash from the bank's Mexican unit to the U.S., with little or no oversight of the transactions. It also conducted transactions with Iran, removing references to the country in an effort to conceal them. Only $…
It's possible this was started by some sub-org within HSBC, where 881M would be a large fraction of that org's size. The management layer above them then doesn't look too deeply, or ensure prior compliance procedure, while promoting and giving bonuses to those who hit high numbers.
Re: HSBC's Money Laundering Scandal (2022)
#5Wachovia laundered more and received a much smaller fine. https://www.theguardian.com/world/2011/apr/03/us-bank-mexico...
Re: HSBC's Money Laundering Scandal (2022)
#6The unfortunate outcomes of these events is that, like a ratchet, it just gets harder and harder for ordinary citizens to go about their lives.
It used to be that you could just walk into a bank and open an account on the spot. And it's still like that in many developing countries.
It's now at the point that just having a bank account is becoming an asset in itself. It's an increasingly major process to open one, and the sense of certainty that your money is actually safe there, and you won't wake up one day to see your money frozen, declines every year that passes.
This goes doubly if you're a foreigner. The amount of delays and paperwork I've had to deal with to have and maintain a bank account is just ridiculous. At some point they're going to need personal attestations from your 12 closest of kin, and a blood sample.
And yet what difference has it all made? With all the KYC nonsense that we all now have to wade through, you still hear regular news of huge successful money laundering operations happening in developed countries.
Re: HSBC's Money Laundering Scandal (2022)
#7> In this case, HSBC provided money-laundering services of more than $881 million to various drug cartels including Mexico’s Sinaloa cartel and Colombia’s Norte del Valle cartel. This included bulk movements of cash from the bank's Mexican unit to the U.S., with little or no oversight of the transactions. It also conducted transactions with Iran, removing references to the country in an effort to conceal them. Only $…
It's possible this was started by some sub-org within HSBC, where 881M would be a large fraction of that org's size. The management layer above them then doesn't look too deeply, or ensure prior compliance procedure, while promoting and giving bonuses to those who hit high numbers.
This is exactly how these things happen. In an organisation that employs quarter of a million employees it's impossible to have perfect transparency and controls everywhere. At this scale you just have to trust that people below you do the right thing. That's not to say there should be no criminal charges for individuals. Just explaining how this transpired.
Re: HSBC's Money Laundering Scandal (2022)
#8> In this case, HSBC provided money-laundering services of more than $881 million to various drug cartels including Mexico’s Sinaloa cartel and Colombia’s Norte del Valle cartel. This included bulk movements of cash from the bank's Mexican unit to the U.S., with little or no oversight of the transactions. It also conducted transactions with Iran, removing references to the country in an effort to conceal them. Only $…
These aren't business decisions taken to corner the money laundering market for Mexican cartels. It's more like Mexican cartels try all the banks to see which ones they can launder money through, and when they find one with poor controls that allow it they double-down on using that bank until their activity is stopped.
Maybe at the country level they were happy with the transaction fees, but I would be surprised if it went any higher than that and certainly wouldn't be worth the risk.
Re: HSBC's Money Laundering Scandal (2022)
#9> In this case, HSBC provided money-laundering services of more than $881 million to various drug cartels including Mexico’s Sinaloa cartel and Colombia’s Norte del Valle cartel. This included bulk movements of cash from the bank's Mexican unit to the U.S., with little or no oversight of the transactions. It also conducted transactions with Iran, removing references to the country in an effort to conceal them. Only $…
These aren't business decisions taken to corner the money laundering market for Mexican cartels. It's more like Mexican cartels try all the banks to see which ones they can launder money through, and when they find one with poor controls that allow it they double-down on using that bank until their activity is stopped. Maybe at the country level they were happy with the transaction fees, but I would be surprised if i…
Do you have a source for the claim that drug cartels "try all the banks to see which ones they can launder money through"?
I don't believe that's how it works at all. If you read, for example Drug Cartels Do Not Exist by Oswaldo Zavala, you'll see that this money is fundamental to how global finance operates. Drug money provided the necessary liquidity to keep the world finance system from crashing in '08. It's the main event, not a sideshow.
Re: HSBC's Money Laundering Scandal (2022)
#10What banks are doing is "a regular cycle" of modern capitalism (although this sounds like nonsense) - greed. This time was HSBC, yesterday was Deutsche, and tomorrow, who knows. I'd suggest reading a light book from Yanis Varoufakis called "Talking to My Daughter About the Economy: or, How Capitalism Works--and How It Fails" [1], where he explains how this cycle fuels the synergy of a modern economy, capitalism, and politics.
[1] https://www.amazon.com/Talking-Daughter-About-Economy-Works-...