Banks Launder Money With Impunity

laundering moneyHSBC is a bank. They are also a money launderer. Last week the Senate subcommittee on investigations, part of the Senate Committee on Homeland Security and Government Affairs, issued a report (pdf) and held a hearing, U.S. Vulnerabilities to Money Laundering, Drugs, and Terrorist Financing: HSBC Case History. Contained within is a laundry list, if we can use the pun, of HSBC evil doings and how they mechanically laundry money for drug cartels, terrorists and tax evaders.

This is over a decade past 9/11 and seemingly HSBC has been operating with impunity. One of the conduits for money laundering is correspondent banking. Correspondent banking is when one financial institution provides services to another financial institution to move funds, exchange currencies, cash monetary instruments, or carry out other financial transactions. Even though in 2002, correspondent banking was recognized as a primary method to fund terrorist activities, the doors have not been shut.

Correspondent accounts continue to provide a gateway into the U.S. financial system, and wrongdoers continue to abuse that entryway.

Below is what has been done since 9/11, yet correspondent banking is alive and well.

Before the 2002 Patriot Act, for example, most U.S. banks opened correspondent accounts for any foreign bank with a banking license; now, most U.S. banks evaluate the riskiness of each foreign bank’s owners, business lines, products, clients, and AML controls before agreeing to open an account. They also routinely monitor account activity and wire transfers for suspicious activity, with enhanced monitoring of high risk correspondents. In addition, before the 2002 Patriot Act, some U.S. banks readily opened accounts for foreign shell banks, meaning banks without any physical presence in any jurisdiction; today, in accordance with the Patriot Act’s ban on shell bank accounts, all U.S. banks take measures to ensure they don’t provide services to such banks, the ban on shell bank accounts has become an international AML standard, and the thousands of stand-alone shell banks licensed by the Bahamas, Cayman Islands, Nauru, and other jurisdictions have virtually disappeared.

Welcome to all hail globalization. HSBC, or Hong Kong Shanghai Banking Corporation, is a global bank. They operate in 80 countries. HSBC's United States affiliate is HBUS and and has over 470 U.S. branches. HSBC bank operates in the Middle East, Latin America and touts the ability to interact with HBUS one of their best services. In other words, HSBC by it's nature, uses correspondent banking.

HBUS is not checking or flagging suspicious transfers. AML stands for anti-money laundering and bottom line, HBUS was circumventing those checks. The regulatory body supposed to be flagging violations and recommending criminal prosecutions is the Office of the Comptroller of the Currency, or OCC and what a surprise, they were asleep at the wheel and worse.

The Subcommittee also examined HSBC because of its weak AML program. In September 2010, the OCC issued a lengthy Supervisory Letter citing HBUS for violating federal AML laws, including by maintaining an inadequate AML program. In October 2010, the OCC issued a Cease and Desist Order requiring HSBC to strengthen multiple aspects of its AML program. The identified problems included a once massive backlog of over 17,000 alerts identifying possible suspicious activity that had yet to be reviewed; ineffective methods for identifying suspicious activity; a failure to file timely Suspicious Activity Reports with U.S. law enforcement; a failure to conduct any due diligence to assess the risks of HSBC affiliates before opening correspondent accounts for them; a 3-year failure by HBUS, from mid-2006 to mid-2009, to conduct any AML monitoring of $15 billion in bulk cash transactions with those same HSBC affiliates, despite the risks associated with large cash transactions; poor procedures for assigning country and client risk ratings; a failure to monitor $60 trillion in annual wire transfer activity by customers domiciled in countries rated by HBUS as lower risk; inadequate and unqualified AML staffing; inadequate AML resources; and AML leadership problems.

HSBC, through their affiliates were clearly laundering Mexican drug cartel money. From the report:

Drug traffickers unable to deposit large amounts of cash in U.S. banks due to AML controls, were transporting U.S. dollars to Mexico, arranging for bulk deposits there, and then using Mexican financial institutions to insert the cash back into the U.S. financial system.

Gets worse. From 9/11 the law creates flagging filters for transactions of known people, groups and countries where terrorism, illegal activity was happening. Banks basically figured out ways around these filters, so their wire transfers and transactions were not flagged.

Because the OFAC filter can end up delaying or blocking transactions that are permitted under U.S. law or by other jurisdictions, some non-U.S. financial institutions have used tactics to circumvent it. Common tactics include stripping information from wire transfer documentation to conceal the participation of a prohibited person or country, or characterizing a transaction as a transfer between banks in approved jurisdictions, while omitting underlying payment details that would disclose participation of a prohibited originator or beneficiary.

Literally HSBC and their affiliates are processing transactions from Iran, North Korea, the Sudan, Burma and Cuba. HSBC is especially active with the same Saudi Arabia bank implicated for funding the 9/11 attacks, Al Rajhi Bank.

An outside auditor hired by HBUS has so far identified, from 2001 to 2007, more than 28,000 undisclosed, OFAC sensitive transactions that were sent through HBUS involving $19.7 billion. Of those 28,000 transactions, nearly 25,000 involved Iran, while 3,000 involved other prohibited countries or persons.

From 2007 through 2008, HBMX was the single largest exporter of U.S. dollars to HBUS, shipping $7 billion in cash to HBUS over two years, outstripping larger Mexican banks and other HSBC affiliates.

The report describes other highly suspicious transactions, including the use of good old fashioned travelers checks.

Over the course of a decade, HBUS opened over 2,000 accounts in the name of bearer share corporations, a notorious type of corporation that invites secrecy and wrongdoing by assigning ownership to whomever has physical possession of the shares.

Where were the regulators for HBUS, the HSBC U.S. affiliate? No where it seems. The OCC supposedly labeled their grievous violations a consumer compliance matter. The OCC also has been labeling these violations Matters Requiring Attention instead of the fragrant violations of the law that they are.

At HBUS, the OCC identified 83 Matters Requiring Attention over five years, without once citing a legal violation of federal AML law. It was only when the OCC found HBUS’ entire AML program to be deficient that the OCC finally cited the bank for a legal violation.

Now think about the implications here of a global bank facilitating drug cartels, terrorists and rogue nation-states financially. Then, contemplate how this story hit the press for only a 24 hours news cycle, promptly buried, as is most news, by the recent and latest shooting tragedy.

HBUS was actually confronted with similar problems in 2003. They promised to clean up their act, which of course never really happened as regulators and Congress went away.

HSBC is poster child for global banking money laundering, but assuredly this is going on elsewhere. HSBC is the uber global bank and it's clear from this report, they are operating with no consequence. The OCC has abandoned their post in terms of monitoring and prosecuting the HSBC affiliates' violations. Literally the HBUS was acting as a gateway into the U.S. financial system and advertised, marketed as such.

Of course we will see major action right? Criminal prosecutions, a revoke of HBUS U.S. charter, some sort of shutting down of glorified terrorist and cartel conduit? Ha, ha, think again. Below are the report's recommendations for HSBC.

  1. Screen High Risk Affiliates. HBUS should reevaluate its correspondent relationships with HSBC affiliates, including by reviewing affiliate AML and compliance audit findings, identifying high risk affiliates, designating affiliate accounts requiring enhanced monitoring, and closing overly risky accounts. HBUS should conduct a special review of the HBMX account to determine whether it should be closed.
  2. Respect OFAC Prohibitions. HSBC Group and HBUS should take concerted action to stop non-U.S. HSBC affiliates from circumventing the OFAC filter that screens transactions for terrorists, drug traffickers, rogue jurisdictions, and other wrongdoers, including by developing audit tests to detect undisclosed OFAC sensitive transactions by HSBC affiliates.
  3. Close Accounts for Banks with Terrorist Financing Links. HBUS should terminate correspondent relationships with banks whose owners have links to, or present high risks of involvement with, terrorist financing.
  4. Revamp Travelers Cheque AML Controls. HBUS should restrict its acceptance of large blocks of sequentially numbered U.S. dollar travelers cheques from HSBC affiliates and foreign financial institutions; identify affiliates and foreign financial institutions engaged in suspicious travelers cheque activity; and stop accepting travelers cheques from affiliates and foreign banks that sell or cash U.S. dollar travelers cheques with little or no KYC information.
  5. Boost Information Sharing Among Affiliates. HSBC should require AML personnel to routinely share information among affiliates to strengthen AML coordination, reduce AML risks, and combat wrongdoing.
  6. Eliminate Bearer Share Accounts. HBUS should close its remaining 26 bearer share corporate accounts, eliminate this type of account, and instruct financial institutions using HBUS correspondent accounts not to execute transactions involving bearer share corporations. U.S. financial regulators should prohibit U.S. banks from opening or servicing bearer share accounts.
  7. Increase HBUS’ AML Resources. HBUS should ensure a full time professional serves as its AML director, and dedicate additional resources to hire qualified AML staff, implement an effective AML monitoring system for account and wire transfer activity, and ensure alerts, including OFAC alerts, are reviewed and Suspicious Activity Reports are filed on a timely basis.
  8. Treat AML Deficiencies as a Matter of Safety and Soundness. The OCC should align its practice with that of other federal bank regulators by treating AML deficiencies as a safety and soundness matter, rather than a consumer compliance matter, and condition management CAMELS ratings in part upon effective management of a bank’s AML program.
  9. Act on Multiple AML Problems. To ensure AML problems are corrected in a timely fashion, the OCC should establish a policy directing that the Supervision Division coordinate with the Enforcement and Legal Divisions to conduct an institution-wide examination of a bank’s AML program and consider use of formal or informal enforcement actions, whenever a certain number of Matters Requiring Attention or legal violations identifying recurring or mounting AML problems are identified through examinations.
  10. Strengthen AML Examinations. The OCC should strengthen its AML examinations by citing AML violations, rather than just Matters Requiring Attention, when a bank fails to meet any one of the statutory minimum requirements for an AML program; and by requiring AML examinations to focus on both specific business units and a bank’s AML program as a whole.

Now think about the above list and the fact HSBC, even after 9/11 has been operating like this for over a decade. One would think HSBC would be facing criminal charges, be broken up, their U.S. affiliate shut down.

Senator Carl Levin (D_MI) in his opening hearing statement said:

Global banks have caused the world a lot of heartache.

That's it? An acknowledgment global banks are running amok, including laundering money for terrorists and drug cartels? Not even a fine, never mind, criminal charges?

Senator Tom Coburn (R-OK) at least said this about the OCC:

Its record of enforcement at HSBC resembles a lapdog rather a watchdog that we sorely need

We do not even see a fine, here, despite the rumors of a $1 billion one coming. What a slap on the wrist that would be too, considering the $22 billion in annual 2011 HSBC profits. Good God, even HSBC's U.S. affiliates' name, HBUS, sounds like a mnemonic to advertise their ability to move and wash money for illegal activities!

Business Insider excerpted the more gory details from the report and says it reads like a James Bond movie, where HSBC is the villain.

What the report reminds us of is the movie, The International. This film was in part based on a true story of another money laundering global bank, the BCCI. What was the moral of the film? They get away with it. Worse, if a few major global players get nailed, there are 50 more international finance rats to take their place. In other words, in spite of this alarming report, we doubt much will happen to clean up the global banking system, especially considering those mealy mouthed recommendations in the face of such damning evidence.

When regulations on Iran tightened in 2003, HBME and HBEU tried to continue doing business with now illegal clients by changing documentation, among other things. 5 Iranian banks took advantage of this to the tune of $500,000 to $1 million a day.

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Comments

Law enforcement is fully aware - and ignores it

HSBC got its start from the Opium Wars in the 19th Century, one of the most tragic incidents in recent history where the British Empire was literally fighting the Chinese so that the British could sell opium to the Chinese. So we see banksters have changed very little in 200 years, but shall we deem them "job creators" for poppy growers, heroin producers, Iranian terrorists, and corrupt politicians? By all means, let us.

I will not delve too much into this issue now, but examine corruption around the globe, and not just inside DC and state capitol buildings. Now, who handles Karzai's finances? Will Karzai retire in the US as a member of the 1% after the Taliban possibly overthrows him? And where exactly did he get all that money (it wasn't from a public servant's salary). How should Americans, unemployed and struggling with homelessness and despair, feel about someone making extreme amounts of money overseas with the help of US foreign aid? Who is helping launder foreign aid that is stolen/misappropriated from NGOs and the World Bank and IMF? Who handles the money for any leader who makes more than his designated salary (and his relatives' wealth) in any nation torn apart by drug violence, terrorism, corruption, etc.? Myanmar is the largest producer of meth in the world (and our Dept. of State wants to ease sanctions - go figure), so where do the junta leaders bank? A local Burmese bank or . . . More of these questions will be posed in the future.

"Follow the money, follow the money." Go to FinCEN's website, the Treasury Department agency devoted solely to fighting money laundering. The DOJ has entire units devoted to fighting money laundering and corruption. So, with hundreds or thousands of officials and attorneys earning over $100,000, and those same people possibly making millions in OFAC and AML compliance in law firms and corporations after leaving "government service," the 99% should ask, "What the Hell is going on and why are banksters helping our enemies with no repercussions, while not stopped by the apparently clueless or complicit, and still making six or seven figure salaries while the average law-abiding American is suffering every single day with no respite."

-Kurtz, I am no one and I am everyone

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Posts being blocked

Your site says the spam filter is not working and therefore posts are being blocked. Are there a list of key words to avoid?

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Thanks for letting me know

I just tested it and things went through. The filters check for spam, so trying to put something like a link with no text or real commentary probably would be automatically deleted.

If you register, login and are not an actual spammer, writing real commentary, you'll end up bypassing the filters.

Could have been down too, some temporary server crash or something but so far I don't see anything wrong.

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Crime pays for banksters - just look at Barclays' ex-COO

Barclays' COO just left after the LIBOR rigging/international crime/something Scotland Yard and the US Govt. will give a pass on was exposed. And what was his "punishment" for taking part in international criminal conspiracies that defrauded the innocent of trillions of dollars? Why, Barclays' former chief operating officer Jerry del Missier left with the equivalent of over $13 million! See, kids, crime does pay. Now, if you study too hard, work too hard, and follow laws and regulations too closely while caring about your fellow citizens, you can come join the West's long-term unemployed, never get an interview for years, and be despised and reviled until you simply die and disappear. Oh, but if you're a criminal and can buy influence and play a rigged game that requires no morals, skills, or intelligence, the world will be yours. So, learn your lesson well. McGruff the Crime Dog says - oh, f*** it, McGruff is sharpening the guillotine.

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Look at what the DOJ considers "crime fighting"

This is straight from the US DOJ's website - McGruff would kid you not! The DOJ is going after some really bad dudes, seeking a few years in prison for some guys who apparently stole IDs and tens of thousands of dollars, not trillions, or billions, or even hundreds of millions like Wall Street and big ol' CEOs, but tens of thousands of dollars! And look how many agencies and people it took to handle this. Now mind you, McGruff hates ID theft (often a result of corporations outsourcing services overseas, but those CEOs are untouchable) and theft of any person's money, but this is what the DOJ is working on as opposed to AGs, DAs, and not international banksterism? Really? Merely confirming the obvious to the 99%.

And here's the quote, directly from the DOJ, staffed by past and future corrupt politician/CEO/bankster defending attorneys:
"By employing an identity theft and bank fraud scheme, the defendants in this case attempted to make a fast buck at the expense of hard-working, law abiding citizens. Instead, they discovered a cold hard truth – crime does not pay,” said U.S. Attorney Haag. Seriously?! HA HA HA!!! If this is a fast buck at the expense of hard-working, law abiding citizens, what do JPMorgan, Barclays, Goldman Sachs, UBS, Deutsche, and every other bankster do? Certainly not RICO and FCPA violations, right? Massive theft over many years approved by the government at the expense of law-abiding people across the globe? What do corporations do when they commit perjury regarding "skills shortages" and American workers' "lack of abilities" to secure cheap labor overseas and here a la Bill Gates and others.
DOJ - your tax dollars at, uhm, work?

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More money laundering and helping our enemies - predictable

Shocking news, who could have predicted, except anyone with a clue and many right here and on other sites - Standard Chartered was also engaged in making huge deals with Iran and hiding them! And completely predictable. And Deloitte is also involved? Gosh, consulting firms too? Still waiting for RICO and FCPA prosecutions and real prison time + forfeitures for CEOs and key personnel, any second now . . .
After Enron fiasco, I thought for sure accounting and consulting firms were really going to be good this time - guess not. Next you'll tell me most international banks and many other MNCs have been conducting international crimes like money laundering and bribery if only anyone in power or law enforcement cared to read blogs and web postings or cared for going on years now. I wonder, and I think we all should wonder, will politicians and MSM that criticize individual criminals or Americans that exercise their 1st Amen. rights or are concerned with drink portions EVER CRITICIZE bankers that help finance terrorism, drug cartels, etc. that literally kill people, destroy societies, build IEDs that kill our troops? Or is that not allowed because politicians that love banksters or are banksters themselves know where their bread is buttered - fellow bankster criminals and not the average law-abiding citizen? Are banksters like Standard and HSBC somehow better than those that protest them, Mayor and other politicians?

OUTSOURCING PLAYS ITS PART
It also turns out Standard Chartered was outsourcing key duties that could have ended these crimes to India. Again, are you telling me outsourcing key jobs overseas to other countries has real consequences? Shocking! Like outsourcing legal review of privileged docs has consequences and every law firm that does it plays with fire and exposes client secrets and law firms and the ABA should bear the consequences of such actions? Like outsourcing medical doc reviews and personal banking info. exposes patients and customers to invasions of privacy, ID theft, actual theft, etc. and banksters and others should bear the consequences of those actions? Again, completely predictable, but we were shut up and shot down every time we talk about it. Those who speak the truth don't find jobs in today's America. Like selling technology and outsourcing to Vietnam and China might endanger our lives and defense technology but Mayors and others said, "What's the harm, outsource everything, bring in more foreigners!" But we were wrong?

So what's the end game - Standard Chartered will probably have a monitor and a fine telling them to be good. Or if politicians want to appear to be tough, maybe they take away the one bank's charter. But not the Americans' TBTF charters ever. RICO or FCPA prosecutions for TBTF? NEVER. Maybe a former US Attorney or bankster law firm will make millions for the job of watching them to make sure they really, really try to be good. You know, like if you support terrorists or break a terrorism law, you could also avoid jail, prison, pay a fine, and maybe a friend could get paid to make sure you try to be good for a few years (only if you are incorporate yourself as a bank or MNC first, though). And when anyone cares to look, every single bank that deals with every corrupt foreign leader will be found to launder massive amounts of loot, but that's for another day and another AG or US Attorney that wants to appear to do something before running for another office.

By the way, all those who would have and could have stopped this inside companies and the govt. are deemed "overqualified" and are purposely not hired and never get past screening software - but hey, they must be lazy and uneducated, right DC and media hacks? MSM can instead focus on tit-for-tat name calling between D & R politicians or who won ping pong in London. After all, why else would criminal organizations not hire people who care and have the skills when they could outsource everything and/or hire people who will just go along with criminal activities.

Double standards, hypocrisy, crony capitalism, the disappearance of the rule of law, outsourcing literally destroying our middle class but enriching our enemies and the politicians ignoring everyone who can see our destruction happen every single day - but who do I vote for, heads or tails, heads or tails? "No one" or "none of the above," or perhaps a good old write-in "They are all worthless."

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Thousands of govt. and bankster employees are paid to know

Considering banks have to use AML software as part of normal operations 24/7 and software is extremely reliable and sophisticated, red flags would have shot up daily left and right globally. AML and OFAC officers, tellers, managers, people everywhere in the global operation had to be on notice. Compliance officers train them on these things, old and new employees all the time. People earn six to seven figures to notice these things, deal with them, and deal with them very quickly. SARs and CTRs have to be filed very quickly as well with Treasury's FinCEN - everyone that has any exposure to law enforcement, banking, or finance knows this. So Treasury FinCEN and its six-figure salaried employees had to be aware - this is their job. Treasury has OFAC personnel and units that would deal with Iran, so they had to be aware. DOJ has a Money Laundering Unit and top level officials in charge - they had to be aware. District Attorneys in bankster heavy jurisdictions (NYC? Mayor Bloomberg? How are things in Bankster Capital USA?) should have been aware considering they fancy themselves "cutting edge" terrorism fighters - guess not.
So, that's a whole lot of organizations, groups, individuals, and politicians who apparently get paid for something, but not sure what (I guess going against banksters or higher-ups would compromise their future careers defending the banks, working in banks, or something with more money). Too bad those people who do care and do know are purposely not brought in - they could save a whole lot of wasted manpower, wasted money, and actually do their jobs.

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free for all

If you have enough money, nothing happens. That's my point, this is too huge for some regulator someone not knowing.

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Standard Chartered laundered 100s of billions - pays tiny fine

Amazing! Imagine if someone laundered $1,000 personally for a terrorism sponsor or laundered hundreds of thousands for a drug cartel. Oh, they'd be going right to federal prison. Different rules apply though if you incorporate yourself, act as a bank, conduct some legitimate business, and lobby, lobby, lobby, and pay/lobby some more to buy yourself legal protection. What we have here is Standard Chartered laundering 60,000 transactions, over 10 years, worth $250 BILLION! And who's going to jail, prison, or house arrest in their Hamptons' retreats? No one. Will Standard Chartered be barred from ever conducting business in the US or elsewhere ever again? Hell no. Will it lose its banking charter? Hell no. It's a fine and Standard Chartered expects pretax profits to rise in 2012! Life is good for banksters. Thank you OFAC, DOJ, Treasury, NY AG, NY DA's Office, you just prove what a mockery the "rule of law" is. Money and banksters pay, you listen, and Iran and its banking buddies can keep on arming people that kill and maim our troops, our citizens, and the troops and citizens of our allies. So, once again, should we "see something, say something" and inform DHS that our government is completely co-opted and different rules apply to banks and corporations that actually endanger our Nation. Bankster Bloomberg, come on, these banksters are arming our enemies. Media, anything to say about how despicable this is? No, we must be wary of Occupy and the unemployed + overqualified Americans who just can't stop being a "burden" despite their best efforts to find any job, of course, banks helping our enemies arm is no threat, people exercising their 1st Amendment rights in the USA are the real threat? What a joke.
Here's the article:
http://dealbook.nytimes.com/2012/12/06/standard-chartered-to-pay-u-s-330...

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