[HN Gopher] HSBC's Money Laundering Scandal (2022)
___________________________________________________________________
HSBC's Money Laundering Scandal (2022)
Author : vinnyglennon
Score : 142 points
Date : 2023-02-05 15:16 UTC (7 hours ago)
(HTM) web link (www.investopedia.com)
(TXT) w3m dump (www.investopedia.com)
| LouisSayers wrote:
| I'm currently reading about money laundering facilitated by
| Australian banks in the book "The Lucky Laundry" by Nathan Lynch.
|
| Here are some recent anti-money laundering law breaches:
|
| * French bank BNP Paribas - fined almost $9 Billion in 2014 [1]
|
| * Commonwealth Bank - fined $700 Million in 2018. [2]
|
| * Westpac fined $1.3 Billion fine in 2020. [3]
|
| It's pretty bad, here are just a couple of examples of the types
| of things going on.
|
| In the case of Commonwealth Bank they knew people would literally
| sit outside ATMs stuffing money into machines until they were
| full, and they didn't do anything about it.
|
| In the case of Westpac, due to their lack of monitoring,
| essentially helped facilitate child abuse transactions [4].
|
| The banks have also gone out of their way to avoid providing
| required SWIFT information by routing money around it
| (counteracting laws put in place to avoid for example
| transferring money to terrorist orgs).
|
| It doesn't sound like anyone from the banking industry got
| arrested (surprise surprise).
|
| In the book he also talks about how the Australian Real Estate
| industry is filled with laundered money and how it is helping to
| prop up the price of housing in Australia. I'm only halfway
| through so assume there might be more details on this in the
| second half of the book.
|
| 1) https://www.reuters.com/article/us-bnp-paribas-settlement-
| id...
|
| 2) https://www.abc.net.au/news/2018-06-04/commonwealth-bank-
| pay...
|
| 3) https://www.bellgully.com/insights/westpac-agrees-to-
| au-1-3-...
|
| 4) https://www.theguardian.com/australia-
| news/2019/nov/21/legal...
| donavanm wrote:
| Some "fun" reading from austrac and friends
| https://www.austrac.gov.au/sites/default/files/2019-07/sa-br...
|
| "Shockingly" real estate agents and solicitors arent covered by
| AML/KYC here. I believe the same problems with opaque
| beneficial ownership extends to trusts as well. Other countries
| have similar challenges, but at least theres some duty to
| report etc. Criminals may be drawn to real
| estate as a channel to launder illicit funds due to the:
| >> ability to buy real estate using cash >> ability to
| disguise the ultimate beneficial ownership of real estate
| >> relative stability and reliability of real estate investment
| >> ability to renovate and improve real estate, thereby
| increasing the value. Criminals are also motivated to buy
| property for further profit or lifestyle reasons.
| Compared to other methods, money laundering through real estate
| - both residential and commercial - can be relatively
| uncomplicated, requiring little planning or expertise. Large
| sums of illicit funds can be concealed and integrated into the
| legitimate economy through real estate.
| jamhan wrote:
| The Anti-Money Laundering and Counter-Terrorism Financing Act
| 2006 (AML/CTF Act) covers AML in Australia. Tranche (Part) 1
| was implemented immediately. Tranche 2, covering real estate
| agents (among others) was supposed to follow reasonably soon
| after. It's now been ~17 years and it's still not
| implemented. [1]
|
| In those years, the Australian property market boomed and
| states like New South Wales with its Stamp Duty tax generated
| billions ($9.379 billion for the 2020-21 financial year) in
| revenue [2]
|
| Last week's arrests [3] are a drop in the bucket.
|
| [1] https://insight.thomsonreuters.com.au/business/posts/tran
| che...
|
| [2] https://www.abc.net.au/news/2021-06-20/stamp-duty-
| adds-9-379...
|
| [3] https://www.abc.net.au/news/2023-02-03/afp-money-
| laundering-...
| AlbertCory wrote:
| There's an episode of _Better Call Saul_ where Mike Ehrmantrout
| launders his $200,000 through a shady company. He gives them the
| cash, they pay him $20,000 a month for "logistics consulting."
| He tells them "make it 'security consulting.' I don't know
| anything about logistics." So he's got a 1099 or W-2 for his
| money, he pays taxes on it, and it's all clean.
|
| How many no-show jobs like this exist?
|
| Or _actual_ jobs at a 501(c)(3). You can start one, hire yourself
| and your "business associates" at salaries that are somewhat
| justifiable, spend 5-10% of the assets annually on legitimate
| charity work, and you're set.
|
| Of course, this doesn't deal as well with drug cartel-class
| amounts of money.
| zxcvbn4038 wrote:
| The Mexican cartels will buy winning lottery tickets, full
| value, cash up front. Then when authorities question the source
| of their income, oh the guy has a nice house because he won the
| lottery fourteen times, here is all the documentation, here are
| the bank records showing the reoccurring deposits. Oh, and it's
| not his nice house, he rents it. The cars are all leased.
| Legitimate income, no assets, even pays taxes - your move
| Johnny Law.
| AlbertCory wrote:
| I hadn't heard of that. I know casinos _had_ been a good way
| to launder money (buy $100,000 worth of chips, lose $5,000,
| cash out for $95,000), but I think they caught on to that.
| zxcvbn4038 wrote:
| The best way today is to give the money to friends and
| family and then have them give it back to you as a gift.
| Gift income is legitimate, the IRS can't go challenge the
| people and ask where they got the money to give to you.
| riskpreneurship wrote:
| [dead]
| MrPatan wrote:
| > the IRS can't go challenge the people and ask where
| they got the money to give to you
|
| Isn't that what the IRS very much does?
|
| You're moving the risk to your "friends".
|
| Or more likely, to a bunch of mules you found on the
| internet who want to believe that they have a job sending
| money back and forth.
| AlbertCory wrote:
| All of us are script kiddies in this game. My bet is, the
| real cartels have moved way beyond anything that any of
| us knows about. Art, jewels, shell companies, real
| estate... the list of possibilities goes on.
|
| That said; banks have to report _any_ transaction that 's
| large ($10,000 is it?), no matter to whom. I'd add "even
| if it's a gift" although I only _suspect_ that 's true.
| thepawn1 wrote:
| This DPA has already expired (
| https://www.marketwatch.com/story/doj-seeks-to-end-hsbc-defe... )
| . .
|
| And HSBC has already had another that was enforced and expired
| already on tax evasion though it's Swiss private bank.
| ineptech wrote:
| > Why Did These Transgressions Come About?
|
| > In the case of HSBC, cost-cutting as part of a wide-ranging
| restructuring of the bank - through selling unprofitable
| businesses and centralizing its global structure - took a toll on
| the bank's compliance department.
|
| Is this satire? Perhaps the reason the Sinaloa cartel sold all
| those drugs was because, in centralizing their organizational
| structure, they laid off the guy who reminds everyone to plant
| corn instead of coca.
| xyzelement wrote:
| The nature of compliance is that you are supposed to guarantee
| that an employee or even a department or branch can't "go bad"
| and do things you are affirming you don't want to be doing. So
| I agree this is a compliance failure though there are more
| proximal causes obviously.
| electric_mayhem wrote:
| Another one? Corporate death penalty needs to be a thing.
|
| Do bad business consistently, as HSBC has since basically the
| dawn of its existence, and get your corporate charter revoked.
|
| Corporations are cynical, self-aware entities. And some, like
| HSBC, are sociopaths and a blight on civilization.
| emmanuel_1234 wrote:
| > Another one?
|
| It's about the 2012 case.
| metadat wrote:
| > 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.
| dankboys wrote:
| One of the key bits is that the cartel worked out the OFAC
| check by HSBC was shitty so could add spaces etc to bypass it.
| It wasn't a conscious decision, but a failure of their process.
| [deleted]
| albntomat0 wrote:
| 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.
| bitcharmer wrote:
| 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.
| rqtwteye wrote:
| If the big guys aren't able to be responsible for bad
| things they also shouldn't take responsibility for good
| things and not get their big paychecks.
|
| In the end if an organization is too big to be controlled
| and to take responsibility it shouldn't exist and be broken
| up.
| mnau wrote:
| It's responsibility of the CEO/BoD to ensure compliance. At
| that size and in that market, compliance departments are
| huge.
|
| We get regular audits of our work by an outside company.
| The exact auditing company rotate to ensure no
| incompetence/cronyism hides something.
|
| As the article states:
|
| > Indeed, prior to 2010 when the OCC cited the bank for
| many AML deficiencies--including a huge backlog of
| unreviewed accounts and failure to file Suspicious Activity
| Reports (SARs)--for the previous six years the agency
| failed to take any enforcement action against the bank
| gadders wrote:
| 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.
| fogforthought93 wrote:
| 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.
| loeg wrote:
| That is an exceptionally contrarian claim.
| fogforthought93 wrote:
| Which one? Back up what you say. _Antonio Maria Costa,
| head of the UN Office on Drugs and Crime, said he has
| seen evidence that the proceeds of organised crime were
| "the only liquid investment capital" available to some
| banks on the brink of collapse last year. He said that a
| majority of the $352bn (PS216bn) of drugs profits was
| absorbed into the economic system as a result._
| fmajid wrote:
| For HSBC I doubt it. But I remember seeing a map of all the
| branches the defunct BCCI bank had, and they had something
| like 10x more branches in Colombia than in the US (this was
| a Pakistani Bank). They went under a few years later.
| fogforthought93 wrote:
| I'm surprised that you'd bring up BCCI in this instance,
| an institution absolutely steeped in intelligence
| spookery. Refer to The Outlaw Bank by Jonathan Beaty.
|
| HSBC was founded to finance the Opium wars in China in
| the 19th century. Let's be adults here, the world's
| biggest banks aren't letting drug trade profits, the
| world's most lucrative trade, simply fall to small fries.
| They own it.
| gadders wrote:
| Global size of illicit drug economy: $360 billion
|
| Global size of FX market: $7.5 trillion _per day_
|
| It's not small money, but it's not that big compared to
| financial markets.
| fogforthought93 wrote:
| Idk where you got that figure for the drug economy but
| $360B _per year_ is on the low-end and likely outdated.
|
| Going off a UN report from the 90s, the illicit drug
| trade is similar to international trade in oil and gas--
| that's the order we're talking about. Remember this is a
| commodity, so it's a bit misleading to compare it the
| flow of money in foreign exchange markets.
|
| UNDCP Technical Series Number 6:ECONOMIC AND SOCIAL
| CONSEQUENCES OF DRUG ABUSE AND ILLICIT TRAFFICKING.
| marcopicentini wrote:
| Someone has to suggest a book about how money laundering works?
| jamhan wrote:
| "Reference guide to anti-money laundering and combating the
| financing of terrorism" (2003):
|
| https://documents.worldbank.org/en/publication/documents-rep...
| mavili wrote:
| HSBC must've only been "found out" because US gov didn't get
| their share. Anyone thinking other big banks are innocent are too
| naive. Drugs, weapons, terrorism.. all major banks and US gov
| have their share in the gains, either financial or political.
| rr808 wrote:
| Why is America even involved? Its Mexican branches of a
| British/Asian bank. Why do US regulators have to get their
| fingers in everything.
| AlbertCory wrote:
| Read _Red Card_ (about the soccer scandal).
|
| Almost everyone in the world uses a clearing operation so that
| the money passes through New York, if only for a millisecond.
| So they can usually find an excuse.
| detaro wrote:
| Mexican branches, moving money to US branches. Don't want the
| US involved in your banking operations, don't do business in
| the US. (Of course you might find not being able to do many
| things involving USD inconvenient if you want to be a relevant
| bank)
| vishnugupta wrote:
| There's a Netflix documentary about this
|
| https://www.imdb.com/title/tt7909188/
| binarymax wrote:
| If 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.
| mirekrusin wrote:
| Who said poor investment? $1.9 billion is just small cut on
| return to pay, no?
| dan-robertson wrote:
| What was their return here? It looks like they were mostly
| transmitting money and doing currency exchange on <$1B.
| They'd surely make at most few percent on that, so much less
| than the fine. Did I misunderstand what the numbers in the
| article meant? Maybe they are suspected to have facilitated
| much more laundering that couldn't be proven, but that would
| need to be approaching $100B for them to break even.
|
| I guess the actual return was having a smaller compliance
| department (not gonna save you $2B though) and getting more
| business due to lax controls making onboarding easier (I find
| it hard to believe that the advantage would make them $2B
| though).
| [deleted]
| resuresu wrote:
| A certain quote from a certain ex president comes to mind.
| erie wrote:
| I remember years ago, I had to help my friend in translation
| during an investigator for money laundering involving HSBC
| account he could not open, yet the bank later opener an account
| under his name- using his ID and documents he sent for the
| account without him knowing it, because we were told at the end
| that if they would call us again it meant my friend was guilty.
| ectopod wrote:
| Wachovia laundered more and received a much smaller fine.
| https://www.theguardian.com/world/2011/apr/03/us-bank-mexico...
| ttctciyf wrote:
| According to a Guardian article[1] from 2012, when HSBC copped
| its $1.9bn settlement for what appears to be its knowing
| involvement in narco-terrorism, the bank duly expressed
| contrition and consented to "install an independent monitor to
| assess reformed internal controls."
|
| The monitoring was part of a five year "deferred prosecution
| agreement" with the DoJ which allowed to bank to avoid actual
| criminal prosecution and so continue to operate in the US
| unhindered.
|
| Later, in 2021, the Guardian reported[2] that HSBC became aware
| as early as 2016 of a money laundering network "involving 92 HSBC
| Hong Kong accounts that received $4.2bn worth of payments between
| 2014 and 2017":
|
| > The bank, which is headquartered in London, would have been
| expected to disclose the information to an independent monitor
| brought in by the US Department of Justice (DoJ) in 2012, when
| criminal proceedings were deferred on condition the bank reform
| its anti-money laundering checks.
|
| However, while anonymous monitoring team members told the
| Guardian they had heard nothing of the $4.2bn network, HSBC
| remained coy:
|
| > HSBC said in a statement that it was illegal to disclose
| information it had shared with government authorities, and said
| "specific discussions with our former monitor remain
| confidential".
|
| In charge of monitoring HSBC's deferred prosecution agreement was
| one Lisa Osofsky, a compliance expert and investigator working
| for Exiger who'd spent three years with Goldman Sachs and seven
| with Control Risks[3].
|
| Doubtless Osofsky's investigatory skills and robust approach to
| financial regulation were factors in her 2018 appointment as head
| of UK's "Serious Fraud Office" (UK's FCC, kind of).
|
| According to HSBC whistleblower Nicolas Wilson[4], as of July
| 2021 Osofsky was living with her husband in a PS3.5m London flat
| "with an HSBC mortgage".
|
| 1: https://www.theguardian.com/business/2012/dec/11/hsbc-
| bank-u...
|
| 2: https://www.theguardian.com/business/2021/jul/28/hsbc-
| faces-...
|
| 3: https://en.wikipedia.org/wiki/Lisa_Osofsky
|
| 4: https://twitter.com/nw_nicholas/status/1420692450260172803
| jamhan wrote:
| Linked from Nicolas Wilson's twitter, this video, about a Tory
| MP and her husband's stealing of GBP 203m of Government money
| for useless PPE at the beginning of the COVID crisis, is
| staggering:
|
| https://twitter.com/ByDonkeys/status/1621174752407851008
|
| Edit: Here's the video on YouTube: https://youtu.be/Bkshh4jOzME
| ttctciyf wrote:
| Tory _peer_ , but yes!
| _rm wrote:
| The 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.
| sygirgafhi wrote:
| I have a Schwab account I made online and had to deal with
| basically 0 humans to create. The worst I have to deal with is
| sometimes if I spend a lot at once I have to answer some
| automated questions to confirm my information hasn't been
| stolen. How do you reconcile this with the claim it's getting
| "harder and harder" when the bar to open and access a bank
| account is so low?
| buildbuildbuild wrote:
| For the ~95% I think banking must be smooth or there would be
| great outcry.
|
| In my experience the risk of becoming unbanked, even
| temporarily, has become worse and worse for the increasing
| number of "outliers":
|
| - a common name
|
| - previous victims of identity theft or doxxing
|
| - legal domestic cryptocurrency exchange use
|
| - privacy-minded people (VPN use, even accidental)
|
| - nomadic lifestyles (lots of IPs, a VOIP number)
|
| - a cash-first lifestyle
|
| - any negative credit or public records irrespective of time
| passed
|
| - bad press about you out there (yes, some products screen
| for this)
| irusensei wrote:
| - you have the wrong passport
| csomar wrote:
| I'm not sure if it's a conspiracy to control the public, or
| simply regulators being irresponsibly incompetent that it can
| be considered criminal.
|
| Most of the KYCs in the developing world can be ignored by
| handing $50-200 over to the right couple of people. Most of
| KYCs in the developed world will be handled by specialized
| "consultants" who will handle the paper work and deliver the
| needed banking services. It's the same thing but it costs more
| in the developed world, huh.
|
| I'm glad you brought this up as I am at loss how most of the
| people accept this sad state of affairs.
| Marsymars wrote:
| > It's an increasingly major process to open one
|
| No disagreements with your post otherwise, but I haven't found
| this to be the case personally. I've opened two bank accounts
| in the past year without much hassle - one a joint account at a
| big bank with my partner that we were able to do fairly
| painlessly from our house. (Opening account in her name was
| online, but then we had to call in for someone to manually add
| me to it while we were both present for security purposes.) The
| other at a credit union just last week - I showed them my
| driver's license, answered a few questions about what products
| I was interested in, bought a share, and walked out with a bank
| card.
| rationalist wrote:
| Which credit union?
|
| All the ones I've encountered incorrectly state that they
| require Social Security Numbers by law. The law only requires
| that they have a numerical identifier, so a state ID/license
| should work as it apparently did in your case.
|
| Edit: I guess the downvotes are for assuming everyone's in
| the U.S., sorry!
| Marsymars wrote:
| Servus, it's a credit union in Alberta/Canada.
| edgyquant wrote:
| My girlfriend and I opened a shared bank account in December.
| It was five minutes in the capital one app and we had a debit
| card less than a week later. I've personally opened 4 bank
| accounts (including that one) through 3 different banks over
| the last two years and each time was a similar process.
|
| What world do you live in where opening a bank account is
| somehow getting more difficult instead of extremely less?
| ur-whale wrote:
| I agree with you very much.
|
| And you're not even touching the other part, which is that when
| you get in the cross-hair of the authorities (even if they
| happen to have a legitimate reason, which more often than not,
| they don't) your money can cease to be yours in the blink of an
| eye, leaving you with absolutely no means to defend yourself.
|
| We need far better legal protection for our assets than what
| currently exist in most so-called civilized countries.
|
| I would go as far as saying that the right to protect your
| assets from _anyone_ is as deeply important than the right to
| free speech.
|
| And this is why crypto, in spite of all its purported
| shortcomings, holds such a deep gut appeal to very many people:
| at an instinctive level, they can feel it's the last resort to
| protecting your freedom from the predatory institutions that
| are supposed to be protecting them.
| csomar wrote:
| > cross-hair of the authorities (even if they happen to have
| a legitimate reason, which more often than not, they don't)
| your money can cease to be yours in the blink of an eye,
| leaving you with absolutely no means to defend yourself.
|
| It's worse than that. Fintech can freeze your money at their
| sole discretion. It's a puzzle to get the money unfrozen. My
| guess is that banks will be next, although they seem to do
| better now. But this practice is protected by the law.
| dig1 wrote:
| What 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-...
| cscurmudgeon wrote:
| > What banks are doing is "a regular cycle" of modern
| capitalism (although this sounds like nonsense) - greed.
|
| This is not capitalism though. Like True socialism/communism,
| True Capitalism has never been tried. This is all crony
| capitalism with state protection.
| chaostheory wrote:
| Agreed. Also if people are going to constantly bring up late
| stage capitalism, we should also talk about late stage
| socialism. Late stage capitalism tends to happen more often
| and much sooner.
| fmajid wrote:
| And late-stage socialism ends up with 50M dead as under
| Stalin or Mao. Pol Pot tried his best to keep up, but he
| just didn't have that many Cambodians available to murder.
| motohagiography wrote:
| I can't help but think there is just a layer of party affiliated
| political power where corruption is a status signal, and you only
| ever face charges when you lose your position and political
| leverage. All the banks launder money, but only some fall into
| disfavour where their political corruption or compromise
| collateral gets called in and someone faces charges.
| valcron1000 wrote:
| Another reason to pick HSBC as my next bank.
| photochemsyn wrote:
| Why aren't bankers who launder billions for drug cartels given
| the kind of multi-decade federal prison sentences that 25-yr-old
| kids smuggling a few kilos of cocaine from Mexico to the United
| State are?
|
| It certainly makes it look like outfits like the FBI and DEA are
| little more than the enforcement arms of an organized white-
| collar crime cartel operating out of Wall Street offices, doesn't
| it? Amusingly James Comey (future FBI chief) got an 'advisory
| legal job' with HSBC after this scandal, which certainly looks
| like payola. Maybe bank robbers could also get out of prison time
| by hiring ex-FBI agents to advise them on how to not rob banks
| anymore?
|
| And yes, you can still find all the cocaine or fentanyl or
| methamphetamine you want with ease in any city in the USA, and
| it's still being shipped by the cartels, and they're still
| laundering the profits through the banking system and the real
| estate property markets, same as they've been doing since the
| 1980s at least.
| josu wrote:
| It is complicated, for many reasons. A very important one is
| that responsibility is very diluted.
|
| - A bank executive opens an account to a seemingly legit
| company.
|
| - The compliance department OKs the account opening.
|
| - A bank teller receives 50k USD in cash every month.
|
| - Another teller receives another 50k USD in cash every month.
|
| - The head of the branch doesn't report strange activity.
|
| - The AML system by the bank don't detect anything strange.
|
| ...
|
| Every one of those steps, and many more, are needed for this
| kind of operation. Who do you send to prison? Do you make the
| CEO responsible even though she probably had no idea that this
| was going on? Or do you send the bank teller to prison, who was
| just doing her job, and maybe even threatened by the cartels?
|
| Even if the branch manager was getting paid by the cartels in
| order to not file AML reports, the payments were definitely
| happening in cash, so the conviction would have to be made
| based on eye-witnesses rather than an actual paper trail (good
| luck with that).
|
| Another important thing is that if you look at the report, they
| blame HSBC for failing to properly monitor the transactions,
| framing the institution more as a victim than an accomplice of
| the cartels. So in reality, it's the cartels doing the money
| laundering, the bank is just a gear in the whole system.
| noobermin wrote:
| Then by that logic, the drug runner should not be jailed
| either, as they too are a victim rather than an accomplice.
| May be they too are being threatened by the cartel to
| cooperate, and so on.
|
| Taken far enough, you really can't penalize anyone and things
| like sanctions don't work and have no teeth.
| d4mi3n wrote:
| I think awareness, agency, and intent are also factors
| here.
|
| In your and the OPs examples:
|
| - CEO _should_ have a large amount of agency and awareness
| of the situation, meaning they should be on the hook for
| severe negligence at the least. If intent can be proven,
| that should definitely result in criminal charges.
|
| - A bank teller might have awareness if they personally
| handle suspiciously large transactions per month, but the
| amount of agency they have in the situation is low. They
| can either report it up their chain of command, do nothing,
| or work elsewhere. You might be able to demonstrate intent
| here if it's the same teller and they don't raise any
| alarms, but that's also assuming nobody has valid reasons
| for regular 50k deposits and that the teller doesn't fear
| for their job or wellbeing.
|
| - Drug runner is a tricky one--how much agency do they
| have? Are they under duress? They likely intend to run
| drugs unless they're in the know about their cargo. As
| other commenters posted, there's also no official way to
| dilute responsibility here as the organization running
| drugs isn't beholden to our legal system, so our
| theoretical drug runner is the only person available to
| punish.
|
| It's an interesting thought experiment. I'd like to hear
| thoughts on how folks _think_ stuff like this should be
| prosecuted -- what outcomes do we want to promote and what
| actions would promote those outcomes?
| olalonde wrote:
| "Money laundering" and "drug smuggling" are two completely
| different things that can't be reasonably compared. A
| better analogy here would be shipping companies or taxi
| drivers being caught unknowingly transporting drugs. I'm
| pretty sure the USPS does that every day and I don't think
| any of their execs go to prison over that. Same for bus,
| taxi or airline companies. In the online world, the DMCA
| explicitly ensures that web hosts and platform operators
| are not on the hook for unknowingly hosting illegal
| content.
| snozolli wrote:
| _Do you make the CEO responsible even though she probably had
| no idea that this was going on?_
|
| You send the CEO to prison because they're responsible for
| what happens under them. CEOs always say they get paid so
| much because they're the ones bearing ultimate
| responsibility, so off to jail you go.
| delusional wrote:
| The first person who went to prison for the VW emissions
| scandal was the engineer.
| abduhl wrote:
| As it should be. The hands that physically commit the
| crime (or the code) are usually the dirtiest.
| snozolli wrote:
| Ah, yes, giving management that sweet plausible
| deniability.
|
| Just create an impossible demand on your workers and then
| act surprised when they employ unethical practices to
| meet those demands. Just like Wells Fargo.
|
| https://en.m.wikipedia.org/wiki/Wells_Fargo_cross-
| selling_sc...
| abduhl wrote:
| That isn't what I said. I said that the person who
| commits the crime should be the first one to go to jail.
| That implies others should follow.
| justinclift wrote:
| Often times, the crime that's committed is because the
| boss told them to do it, then threatened the engineer
| when they initially said No.
| abduhl wrote:
| Yes well that's how a lot of crime happens. We don't
| avoid prosecuting a triggerman, carjacker, or bank robber
| just because they got the order and were threatened with
| death for not complying. Even the Eichmanns that were
| just following orders went to Nuremberg.
| olalonde wrote:
| That's completely unreasonable. The probability of any
| Fortune 500 CEO going to prison would basically be 100%.
| Should the US president go to prison whenever a government
| employee commits a crime as well?
| snozolli wrote:
| The President isn't the CEO of America, Inc., and
| American government isn't a monolithic organization.
|
| However, yes, if sufficiently illegal activities were
| going on within the President's cabinet, then yes, send
| the President to prison.
|
| As for any Fortune 500 CEO going to prison, well, that
| risk would certainly incentivize the pursuit of good
| behavior from the top down, wouldn't it?
| moistly wrote:
| The fish rots from the head down.
| olalonde wrote:
| I hate banks as much as anyone but... The concept of "money
| laundering" is a fabricated offense that shouldn't even exist.
| It basically shifts the duties of law enforcement onto private
| businesses and individuals. The expectation for bankers or real
| estate agents to uncover criminals when the police struggle to
| do so is unreasonable and doesn't make sense. Sure they should
| cooperate with police investigations but they shouldn't be
| leading them. Additionally, private businesses are not subject
| to the same legal principles such as the presumption of
| innocence and due process, leading to countless individuals
| being denied access to basic banking services based on
| perceived risk[0]. To top it off, those laws are ineffective
| and very costly to implement[1].
|
| [0] There is an estimated 1,400,000,000 unbanked people
| worldwide (a good chunk of which are denied access on the basis
| of risk and/or lack of satisfying identification).
|
| [1] https://www.cato.org/blog/money-laundering-laws-
| ineffective-...
| bastawhiz wrote:
| I don't think you answered the question. If I facilitate a
| drug cartel moving kilograms of cocaine, I'll be in jail
| until I'm very old. If a bank knowingly facilitates the same
| outcome through different means, why doesn't anyone at the
| bank face the same charges?
|
| What you're saying is that even though money laundering is
| necessary for drug cartel operations, it shouldn't be a crime
| (or should be a much lesser crime). So if I carry the drugs
| across state lines, even if I put in the same abstract amount
| of effort to completing a drug trade as the folks at the bank
| laundering money, my crime is worse?
|
| There is the obvious argument that neither of these should be
| real crimes. But the fact remains that today in the world
| that exists, one group of people that facilitate drug cartel
| operations are punished much more harshly than another group.
| The disparity in punishment is what the parent comment is
| remarking on.
| vishnugupta wrote:
| You bring up a fascinating aspect of money which I like to
| contemplate about often.
|
| Money is the pure abstraction in the sense that it hides
| just about everything that brought it into existence. If I
| look at two $100 bills they are _exactly_ the same;
| theoretically and practically. And yet they couldn 't
| possibly be similar, they could have originated in crimes,
| be parts of legitimate businesses, so on and so forth. But
| they still continue to exist as pure abstraction. One could
| get into all sorts of philosophical rabbit holes.
|
| What sorts of arguments would have had at the cusp of using
| coins?
| olalonde wrote:
| You didn't mention it explicitly so just in case you
| didn't know, what you are describing is called
| fungibility[0] and is indeed an important property of
| money.
|
| [0] https://en.wikipedia.org/wiki/Fungibility
| jasonwatkinspdx wrote:
| I think you'd find David Graeber's book Debt very
| interesting. There are a bunch of common assumptions
| about how money came into existence that simply aren't
| what happened based on the archeological record.
|
| Coinage came a lot later than basic debt ledgers, and it
| was largely an organizational hack by rulers to feed and
| house their armies. They'd mint coins with their face as
| seal or whatever, and would issue these to the soldiers
| as payment, while also requiring all citizens to pay a
| tax in those same coins. Suddenly everyone is figuring
| out how to give the soldiers what they want without you
| having to organize any of it directly.
| jasonwatkinspdx wrote:
| Banking has achieved de facto regulatory capture. We see the
| same patterns over and over again of the consequences of high
| risk systemic behavior being born by taxpayers, but it's
| business as usual for everything continuing the status quo.
| Unless voters start creating pain at the ballot box, it'll just
| continue.
|
| There's also unfortunately some practical issues with
| prosecuting finance crimes. The cases are long and difficult to
| articulate to a jury. The SEC, IRS, etc have limited resources
| by design of congress, and so prioritize slam dunk cases and
| plea deals. The exception seems to be if enough big investors
| get scammed.
| seanmcdirmid wrote:
| Aren't most of the offenders located outside of the USA? The
| USA claims international jurisdiction on money laundering and
| bribery and such, but other countries don't necessarily agree.
| The best they can do is fine a company a lot of money (which
| they pay up because otherwise they can't do business in the
| USA), actual criminal prosecution against individuals would
| require a lot of cooperation in countries like China or
| Singapore who are unlikely going to provide that. Even London
| (where the top execs are based) is going to be a stretch.
| [deleted]
| cm2187 wrote:
| Next time your bank account gets closed or an important payment
| gets held because the bank thinks there is something
| potentially dodgy, you will reflect on your comments about
| bankers going to jail if some drug dealer ever manages to get a
| payment through the banking system. Laundered money doesn't
| come with a "drug money" sticker, usually it comes from a
| business that is designed to look legit.
| sabujp wrote:
| don't forget art markets too!
| belter wrote:
| "Why not a single banker was jailed over HSBC's billion-dollar
| money laundering scandal" - https://inews.co.uk/news/long-
| reads/hsbc-money-laundering-sc...
| kasey_junk wrote:
| In this particular case it's because the UK Chancellor of the
| exchequer called the head of US treasury and intervened on
| their behalf (as did the regulatory body in the UK).
|
| If a drug mule has powerful friends they'd probably get a
| lighter sentence too.
| credit_guy wrote:
| > Why aren't bankers who launder billions for drug cartels
| given the kind of multi-decade federal prison sentences
|
| You mean like these 35 guys who went to prison? Including one
| who went for 23 years?
|
| [1] https://money.cnn.com/2016/04/28/news/companies/bankers-
| pris...
| buitreVirtual wrote:
| This CNN article is about recovery fund fraud, not money
| laundering, and more importantly it highlights that only
| middle to small bank executives, and only lower level
| executives at too-big-to-fail banks, were punished.
| TacticalCoder wrote:
| Official CIA factbook numbers: 3% to 5% of the world's entire
| _fucking GDP_ is due to criminal activities [1].
|
| Of course this money mostly all ends up in the real economy.
|
| [1] Numbers which do not account for what should be accounted as
| criminal activities but aren't because they're endorsed by the
| state.
| specialist wrote:
| Asking because I don't know how to find out...
|
| Which large banks are scandal free?
|
| I don't mean perfidy, like the 2009 mortgage crisis or LIBOR or
| using bail out money for bonuses or helping clients with tax
| avoidance.
|
| I mean straight up no doubt illegal and criminal stuff.
| Laundering, bribes, violating sanctions, and so forth.
| rr808 wrote:
| I think you also have to ask are the regulators really finding
| real crimes or prosecuting grey areas that will win lots of
| money out of politically unpopular companies. New York makes a
| lot of money out of these fines which they can use for whatever
| they want.
| rqtwteye wrote:
| There companies are simply too big. If they were smaller you
| could just shut down the offending company which then would
| make others pay more attention.
| moistly wrote:
| HSBC exists because of Opium. It has _always_ been the bank of
| the drug cartels.
|
| > HSBC was founded after the second of the Opium Wars, by which
| time the trade was already well established. The founders
| included several opium traders who recognised the profitable
| banking opportunities presented by the new market.
|
| https://taxjustice.net/2015/02/27/hsbc-and-the-worlds-oldest...
|
| They've been in the thick of it since forever, unrelentingly.
|
| https://www.cadtm.org/HSBC-the-bank-with-a-shameful-past
|
| https://unpublishedarticles.com/hsbc-hong-kong-shanghai-bank...
| noNothing wrote:
| Many years ago I did some work at a large race track and they
| were very concerned about money laundering. They worked closely
| with the local authorities to recognize any potential issues. I
| guess it all depends on the companies leaders as to what they
| want to risk.
|
| There are many opportunities to be complicit. Illegal exports,
| selling customer information, aiding money laundering, ... It
| seems wrong that petty criminals server harsher penalties than
| corporate leaders (or politicians) even though the corporate
| leaders commit worse crimes.
| luckylion wrote:
| > I guess it all depends on the companies leaders as to what
| they want to risk.
|
| That's my experience as well. I've never worked in banking, but
| I've worked with igaming companies before, and some are
| basically ignoring regulation and will just stop something if a
| regulator catches them while others are 100% by the book.
|
| I've once asked the COO of a fully compliant company why
| they're competing with their hands tied behind their back and
| his reply was simply "because I don't want to go to jail". I'm
| guessing the folks at other companies had a different risk-
| reward analysis.
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