Another bank gets a bad name

Yesterday HSBC got a pasting from a US Senate committee investigating money laundering through the bank - and in particular drug money passing through its Mexican bank subsidiary.

HSBC's head of group compliance fell on his sword (metaphorically speaking) before the investigating committee - declaring that it was time HSBC had a new person in the role.

HSBC says it is cleaning up its act and, as part of that process, is closing 20,000 accounts on the Cayman Islands.

No doubt AWEB readers will be somewhat put out that, while they take their own responsibilities very seriously, banks such as HSBC have apparently been extremely lax in their anti-money laundering controls in relation to vast sums of money in some high risk countries.

David

Comments

London, meanwhile...?

Stephen Morris | | Permalink

Am just wondering whether other London banks are implicated in money laundering. Probity does not appear to be the banks' strong point and I wonder whether large and dirty  sums may have caused them to suspend their better judgement

So what?

chatman | | Permalink

With such massive disparities in wealth in the countries in which HSBC operates (UK, US, Mexico etc), this type of corruption is to be expected. I am amazed that anyone is surprised.

Moral Corruption    2 thanks

chatman | | Permalink

Stephen Morris wrote:
I wonder whether large and dirty  sums may have caused them to suspend their better judgement

Of course it has; that is what economics is about these days.

listerramjet's picture

oh no it isn't

listerramjet | | Permalink

chatman wrote:

Stephen Morris wrote:
I wonder whether large and dirty  sums may have caused them to suspend their better judgement

Of course it has; that is what economics is about these days.

All I can suggest is that you grow up

WTF?

chatman | | Permalink

listerramjet wrote:

chatman wrote:

Stephen Morris wrote:
I wonder whether large and dirty  sums may have caused them to suspend their better judgement

Of course it has; that is what economics is about these days.

All I can suggest is that you grow up

What a highly intellectual comment; and so mature. I hope you manage to calm down a little and express yourself more clearly. It must be tough to be so angry and yet not be able to explain why.

It beggars belief...

Trevor Scott | | Permalink

... that they weren’t in on the money laundering operation. Mexico could never be classed as low risk.

Since London is commonly known to be a major part of world-wide money laundering operations, I suppose that in a few years there will be shocking headlines that the new financial regulatory authority didn’t know that money was laundered in London.

That HSBC’s other "trained" personnel didn’t pick up on these discrepancies, in my opinion tends toward the idea that they knew what was going on. And just why didn’t HSBC’s business partners pick-up on the failings during various dealings? This has got to be just the tip of the ice berg.

 

listerramjet's picture

WTF?

listerramjet | | Permalink

says it all really

Superb    1 thanks

The Black Knight | | Permalink

Makes you wonder whether all the Anti money laundering nonsense we have to put up with. Is really just protecting the larger players from new entrants to the market.

We have public enquiry after public enquiry to fool the public which are probably just misdirection.

The banks get fined (do they ever pay I wonder?) the politicians make apologies and the drugs lords carry on anyway. I guess they know they can buy new politicians and bankers.

Economics: Would be interesting to know if our economies would grind to a halt without all this illegal circulation of cash. Some of it has to find its way into legitimate business and taxation?

All adds to benefit everyone does it not?

If it was not so important to our economies you would think they would use the rules to stop it.

 

ShirleyM's picture

I don't think so, Black Knight

ShirleyM | | Permalink

Economics: Would be interesting to know if our economies would grind to a halt without all this illegal circulation of cash. Some of it has to find its way into legitimate business and taxation?

Illegal circulation of cash takes a massive amount out of the economy, and puts very little back. It also penalises law abiders, and puts them at a distinct disadvantage, which further encourages the black market or disregard of laws.

 

out of the visible economy    1 thanks

The Black Knight | | Permalink

ShirleyM wrote:

Economics: Would be interesting to know if our economies would grind to a halt without all this illegal circulation of cash. Some of it has to find its way into legitimate business and taxation?

Illegal circulation of cash takes a massive amount out of the economy, and puts very little back. It also penalises law abiders, and puts them at a distinct disadvantage, which further encourages the black market or disregard of laws.

 

It does take it out of the visible and accountable economy, as in not in the figures anymore. But I would argue that it is still there and on the basis that every £1 spent has a multiplication effect on the economy it actually aids the economy. Where would the aircraft, boat, cars and arms industries be without drugs lords and dealers for that matter spending their money.

It is in fact circulating cash which is what our economy is about.

The overall effect is just a lower amount of taxation which is known to stimulate the economy. Unfortunately those few of us in the real economy are paying their share.

At a secondary level the insurance industry relies on crime to charge ever higher premiums whilst taking kickbacks from lawyers to pursue dubious and fraudulent claims that in most cases no one is interested in investigating.

I agree with you that is is not right but our leaders have engineered the system to work this way.

I would say the legitimate figures are so far out as to not be of any real value anymore.

 

Confiscation    1 thanks

bobhurn | | Permalink

I was wondering whether confiscation proceedings would follow in the basis of a bank allegedly leading a criminal lifestyle.  But of course it won’t after all they went to a decent school can't penalise chaps like that.

out of the economy

Huw Williams | | Permalink

The multiplier effect which is often cited may or may not be true as the recent efforts in the UK by way of quantitative easing do not appear to have kick-started the econmomy

If the mutliplier effect is true, then it depends on what happens to the money.  If it is spent then it might have an effect.  If it is salted away in a bank account or under the mattress it cannot have an effect.

Judging by all the spy / thriller movies, the black economy money spends a lot of its life hidden in briefcases before being incinerated by the good guys!  My vote would be for clamping down on the black economy!

The whole purpose of bank secrecy

The Black Knight | | Permalink

Was so this money in briefcases could get back to the bankers ? So they could lend to banks that lent to banks that lended to businesses ?

All of this has a double edge sword? and our economy is in such a mess I would wager that the black economy is all that is keeping things going.

Quantitative easing? We haven't seen any effect of this, perhaps because like everything else it was just a political statement made by people who have no interest in whether things are working or not.

They just need the PR factor to con people into voting for them.

Tip of the iceberg    1 thanks

alistair_king | | Permalink

Follow the many links in this:

http://www.zerohedge.com/contributed/2012-08-01/stunning-crimes-big-banks-worse-your-wildest-imagination

Banks have been getting away with a lot for a long time. Usually they just get a fine and nobody goes to jail.

Even the bankers committing the frauds that triggered the 2008 crisis - nobody got prosecuted or went to jail - despite it all being a matter of public record in the US Congressional hearings.

Its worth repeating the story for those that think it was just an overeager appetite for risky mortage backed securities... (1) A very big seller of these securities was actively and knowingly selecting defaulting mortgages in order to be able to short them after it unloaded them onto its customers, whilst HEAVILY pressurising the ratings agencies (freezing them out of the money due to them) to give them AAA ratings. (2) Banks were reselling the same mortgage debt to multiple customers.

 

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