Thursday, December 13, 2012

The Banksters

Accused of failure to maintain an effective anti-money laundering program to conduct due diligence on its foreign correspondent affiliates, and for violating sanctions and the Trading With the Enemy Act the British-based bank, HSBC, paid a $1.92 billion payment to settle charges. HSBC assured its clients from nations under sanctions, like Iran, could funnel cash through the United States without being ensnared by computer filters. It permitted narcotics traffickers to launder hundreds of millions of dollars through HSBC subsidiaries. It worked closely with Saudi Arabian banks linked to terrorist organizations.

The U.S. Justice Department decided to opt for a cash settlement, rather than seeking a criminal indictment against the bank. SOYMB woud be curious to know what the difference is between that and a bribe by the bank, whose officials will not be charged and prosecuted as criminals.

"We accept responsibility for our past mistakes,”
Stuart Gulliver, the chief executive of HSBC, said in a statement. “We have said we are profoundly sorry for them." In other words, its a fair cop, we got caught and we promise never ever to be bad again if you let us off this time.

HSBC once too-big-to-fail has become too-big-to-prosecute and now officially above the law.

Entering into a deferred prosecution agreement allows a bank to avoid having the black mark of a criminal conviction on their record. While the bank admits to the facts constituting a violation, compliance with the terms of the agreement means that prosecutors will not file charges. That is important because under federal law, the Federal Deposit Insurance Corporation can revoke a bank’s insurance for engaging “in unsafe or unsound practices in conducting the business of the depository institution” that results in a criminal conviction. The frequency of the  use of these agreements raises the question of whether banks have come to regard them as just another cost of doing business, leaving the impression that, for the banking sector, these settlements have become little more than expensive parking tickets. Bank CEO'S turn a blind eye to what is happening, happy to see the profits roll in from questionable transactions.  HSBC is still part of a wide-ranging investigation into the manipulation of the London interbank offered rate, or Libor. HSBC has also been implicated in tax evasion investigations by account holders using its branches in offshore tax havens.

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