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HSBC exposed: Drug money banking, terror dealings

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gente

gente

HSBC exposed: Drug money banking, terror dealings


17 July, 2012, 20:43



International banking giant HSBC may have financed terrorist groups and funneled Mexican drug money into the US economy through its lax policies, a damning Senate report reveals. The bank’s bosses have apologized for the misconduct.
David Bagley, HSBC’s Head of Group Compliance, admitted during a Senate subcommittee hearing that the company had made a number of lapses, adding that he planned to resign.

“I recognize that there have been some significant areas of failure,” Bagley told the US Senate Permanent Subcommittee on Investigation. “I have said before and I will say again: despite the best efforts and intentions of many dedicated professionals, HSBC has fallen short of our own expectations and the expectations of our regulators.”
Irene Dorner, CEO and President of the bank's American operation (HBUS), told the panel that HSBC deeply regrets the lapses in oversight, apologizing for the company's mistakes.
Senator Carl Levin, the chairman of the subcommittee, gave details of one such intricate scheme to launder cash between 2006 and 2009.
“Because our tough AML (anti-money laundering) laws in the United States have made it hard for drug cartels to find a US bank willing to accept huge unexplained deposits of cash, they now smuggle US dollars across the border into Mexico and look for a Mexican bank, or ‘casa de cambio’ to take the cash.,” Levin noted. “Some of those casas de cambio had accounts at HB Mexico, which, in turn, took all the physical dollars that it got, transported them by armored car or aircraft back across the border to HBUS for deposit in its US Banknotes account, completing the laundering cycle.”
The Senator welcomed HSBC’s apologies, but said it also had to be held accountable. He called on the bank to consider shutting down its Mexican affiliate, as well as other banks suspected of providing funding for terrorists.
Earlier, Levin said “the culture at HSBC was pervasively polluted for a long time.”
The findings are the results of a year-long Senate probe into HSBC’s activities, highlighting systemic negligence throughout the bank’s international structure. The probe will be published in a 340-page report in Washington on Tuesday.
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Financing terror and flouting the rules


HSBC’s activities in Saudi Arabia were brought into question in the report, specifically referencing banking with Al Rajhi Bank. The investigation claims the Saudi bank has links to financing terrorism based on evidence gathered after the September 11 attacks.
Information collated by investigators suggests one of Al Rajhi’s founders was an “early financial benefactor of al-Qaeda.”
HSBC forbade its affiliates from doing business with the Saudi bank in 2005, but this policy was overturned only a few months later when the banks resumed dealings.
In addition, the report cites dealings with two Bangladeshi banks thought to have links with terrorist organizations.
"From an oversight perspective, the failure of accountability here is dramatic," Senator Levin commented.
The probe also details how the bank bypassed US safeguards that protect against transactions potentially involving terrorists, drug lords, and rogue regimes. The investigations committee alludes to almost 25,000 transactions to Iran amounting to over $19 billion conducted through the bank's US office over a period of seven years. The bank did not disclose that the funds were being sent to Iran.
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Narco-banking


The reports cities HSBC’s activities in Mexico, highlighting the fact that the country was treated as a long-risk client despite being a known hub for drug trafficking and money laundering.
It gives reference to the banking conglomerate’s Mexican affiliate transporting a total of $7 billion in hard cash to HBUS from 2007 to 2008. The sheer quantity of capital transferred raised concerns that some of it came from illegal drugs sales in the US.
The report also implicates the Office of the Comptroller of the Currency (OCC), a US financial regulator, for failing to regulate HSBC’s activities.
The OCC reported multiple failings on the part of HSBC in 2010 to implement anti-money laundering measures, namely its failure to monitor $60 trillion in bank transfers and 17,000 account alerts detailing suspicious activity.
The Senate report lays the blame for HSBC’s negligence over the past six years partly at the feet of the OCC for its lack of action in spite of consistent evidence of the banks money laundering issues.
"We have learned a great deal working with the subcommittee on this case history and also working with US regulatory authorities, and recognize that our controls could and should have been stronger and more effective in order to spot and deal with unacceptable behavior,” HSBC said in a statement. The bank also emphasize that they had already taken “concrete steps” to address the issues including drastic changes to “strengthen compliance, risk management and culture."
The new report comes after the UK’s largest bank revealed it would have to pay a $1 billion fine to US authorities for money laundering offenses committed between 2004 and 2010.

MrsCK



There Hong Kong branch just got a boat load fire for "putting their hands in the cookie Jar"

A comment I received Tuesday about Monday "oops in hong kong"


"They tried to drop the rvs into the banks yesterday but a few of them refused which prompted arrests as far as hong kong...hsbc in hong kong had 100 removed."

SCOOBYDOO



CK I SAW ON THE NEWS YESTERDAY THAT HSBC MAY GET THEIR BANKING LISENCE REVOKED IN THE USA, HELLO UNEMPLOYMENT LOL

MrsCK




HSBC ‘Sorry’ for Aiding Mexican Drugs Lords, Rogue States and Terrorists


Executive quits in front of US Senate as bank faces massive fines for ‘horrific’ lapses that resulted in laundering money for drugs cartels and pariah states

By Dominic Rushe in New York, The Guardian, UK – 17 July 2012

http://www.guardian.co.uk/business/2012/jul/17/hsbc-executive-resigns-senate

Executives with Europe’s biggest bank, HSBC, were subjected to a humiliating onslaught from US senators on Tuesday over revelations that staff at its global subsidiaries laundered billions of dollars for drug cartels, terrorists and pariah states.

Lawmakers hammered the British-based bank over the scandal, demanding to know how and why its affiliates had exposed it to the proceeds of drug trafficking and terrorist financing in a “pervasively polluted” culture that persisted for years.

A report compiled for the committee detailed how HSBC’s subsidiaries transported billions of dollars of cash in armoured vehicles, cleared suspicious travellers’ cheques worth billions, and allowed Mexican drug lords buy to planes with money laundered through Cayman Islands accounts.

Other subsidiaries moved money from Iran, Syria and other countries on US sanctions lists, and helped a Saudi bank linked to al-Qaida to shift money to the US.

David Bagley, HSBC’s head of compliance since 2002, and who had worked with the bank for more than 20 years, resigned before the committee.

“Despite the best efforts and intentions of many dedicated professionals, HSBC has fallen short of our own expectations and the expectations of our regulators,” he said.

The bank has been under investigation for nearly a decade, and faces a massive fine from the US justice department for lapses in its safeguards. Senators Carl Levin and Tom Coburn, who conducted the hearing, said the permanent subcommittee of investigations had examined 1.4m documents as part of its review and thanked the bank for its co-operation.

The bank has apologised for its lapses and said reforms had been put in place. Paul Thurston, chief executive of retail banking and wealth management, who was sent in to try and clear up HSBC’s Mexican banking business in 2007, said he was “horrified” by what he found.

“I should add that the external environment in Mexico was as challenging as any I had ever experienced. Bank employees faced very real risks of being targeted for bribery, extortion, and kidnapping – in fact, multiple kidnappings occurred throughout my tenure,” he said.

The committee had released a damning report on Monday, which detailed a collapse in HSBC’s compliance standards. The report showed executives at the bank has consistently warned of problems. At its Mexican subsidiary, one executive had warned the bank was “rubber-stamping unacceptable risks”, according to one email gathered by the committee.

HSBC’s Mexican operations moved $7bn into the bank’s US operations, and according to its own staff, much of that money was tied to drug traffickers. Before the bank executives testified, the committee heard from Leigh Winchell, assistant director for investigative programs at US immigration & customs enforcement. He said 47,000 people had lost their lives since 2006 as a result of Mexican drug traffickers.

The senators highlighted testimony from Leopoldo Barroso, a former HSBC anti money-laundering director, who told company officials in an exit interview that he was concerned about “allegations of 60% to 70% of laundered proceeds in Mexico” going through HSBC’s affiliate.

“In hindsight,” said Bagley, “I think we all sometimes allowed a focus on what was lawful and compliant rather than what should have been best practices.”

Levin and Coburn directed particular ire at a Cayman Islands subsidiary set up by the Mexico division of HSBC. That bank handled 50,000 client accounts and $2.1bn in holdings, but had no staff or offices. Money from the Cayman Islands was used to buy planes for Mexican drug traffickers, said the senators. Bagley said those accounts were all now in the process of being closed.

“Forget hindsight,” said Levin. “Is there any way that should have been allowed to happen?”

“No, senator,” said Thurston.

Levin repeatedly said that HSBC must have been aware of the problems. “This is something that people knew was going on at the bank,” he said.

Bagley and Thurston said that HSBC’s compliance had been fragmented and that oversight had been poor. They said that had now been changed. The bank has now adopted a global compliance structure and doubled the amount of money it is spending on oversight.

“Criminals operate globally and if we are to combat them and stop them from accessing and abusing the financial system, we must look at issues from a global perspective. Institutions which operate internationally, like HSBC, will be targeted by these criminals, and our experience in Mexico vividly demonstrates that you are no stronger than your weakest link,” said Thurston.

While much of the hearing focused on Mexico, the senators also slammed the bank for dealings in Iran, Syria, Cuba, and other countries on US sanctions lists. HSBC executives continued to so business with Al Rajhi Bank in Saudi Arabia, even after it emerged that its owners had links to organizations financing terrorism and that one of the bank’s founders was an early financial benefactor of al-Qaida.

While Coburn was unsparing of his criticism of HSBC, he thanked the bank for its co-operation and said there were issues at other institutions including Citigroup, Wachovia and Western Union.

But the report comes at a highly sensitive moment for British banks in the US. Following Barclays fine in the Libor-interest rate scandal and the massive losses at JP Morgan Chase’s London offices US politicians have become increasingly critical of the UK’s financial services sector.

At a recent hearing into the JP Morgan losses, Carolyn Maloney, a Democratic representative from New York, said: “It seems to be that every big trading disaster happens in London.”

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