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HSBC 2012 money laundering was so great that if charged it could have led to 'a global financial disaster'

Wednesday, July 13th 2016 - 06:30 UTC
Full article 21 comments
The bank, which has its headquarters in London, paid a US$1.92bn settlement but did not face criminal charges . No top officials at HSBC faced any charges. The bank, which has its headquarters in London, paid a US$1.92bn settlement but did not face criminal charges . No top officials at HSBC faced any charges.
The report alleges the UK “hampered” the probe and “influenced” the outcome. HSBC was accused of letting drug cartels use US banks to launder funds. The report alleges the UK “hampered” the probe and “influenced” the outcome. HSBC was accused of letting drug cartels use US banks to launder funds.
A US Congressional report revealed UK officials, including Chancellor George Osborne, added to pressure by warning the US it could lead to market turmoil. A US Congressional report revealed UK officials, including Chancellor George Osborne, added to pressure by warning the US it could lead to market turmoil.
Osborne intervened by sending a letter to Fed Chairman Ben Bernanke... to express UK's concerns regarding “US enforcement actions against British banks.” Osborne intervened by sending a letter to Fed Chairman Ben Bernanke... to express UK's concerns regarding “US enforcement actions against British banks.”
The report accuses former US Attorney General Eric Holder of misleading Congress about the decision. The report accuses former US Attorney General Eric Holder of misleading Congress about the decision.
Allegedly Mr. Holder ignored recommendations of more junior staff to prosecute HSBC because of the bank's “systemic importance” to the financial markets. Allegedly Mr. Holder ignored recommendations of more junior staff to prosecute HSBC because of the bank's “systemic importance” to the financial markets.

United States officials refused to prosecute HSBC for money laundering in 2012 because of concerns within the Department of Justice that it would cause a “global financial disaster”, a report says. A US Congressional report revealed UK officials, including Chancellor George Osborne, added to pressure by warning the US it could lead to market turmoil.

 The report alleges the UK “hampered” the probe and “influenced” the outcome. HSBC was accused of letting drug cartels use US banks to launder funds. The bank, which has its headquarters in London, paid a US$1.92bn (£1.48bn) settlement but did not face criminal charges . No top officials at HSBC faced any charges.

The report says: “George Osborne, Chancellor of the Exchequer, the UK's chief financial minister, intervened in the HSBC matter by sending a letter to Federal Reserve Chairman Ben Bernanke... to express the UK's concerns regarding US enforcement actions against British banks.”

The letter said that prosecuting HSBC could have “very serious implications for financial and economic stability, particularly in Europe and Asia”.

Justice Department spokesman Peter Carr said a series of factors were considered when deciding how to resolve a case, including whether there may be “adverse consequences for innocent third parties, such as employees, customers, investors, pension holders and the public”.

The report also accuses former US Attorney General Eric Holder of misleading Congress about the decision. The report says Mr Holder ignored the recommendations of more junior staff to prosecute HSBC because of the bank's “systemic importance” to the financial markets.

“Rather than lacking adequate evidence to prove HSBC's criminal conduct, internal Treasury documents show that DOJ [Department of Justice] leadership declined to pursue [the] recommendation to prosecute HSBC because senior DOJ leaders were concerned that prosecuting the bank 'could result in a global financial disaster',” the report said.

Instead, the Department of Justice and HSBC reached the settlement, which some politicians criticized for being too lenient. Testifying before Congress in 2013 Mr Holder said the size of some financial institutions can make it difficult to bring criminal charges.

He later tried to clarify those remarks telling Congress: “If we find a bank or a financial institution that has done something wrong, if we can prove it beyond a reasonable doubt, those cases will be brought.”

Congress's report deemed these comments to be misleading in light of emails from Treasury Department staff that recommended criminal charges.

The 2012 settlement with HSBC detailed how the bank violated US sanctions by conducting business for customers in Iran, Libya, Sudan, Burma and Cuba. HSBC accounts were also used by the Sinaloa drug cartel in Mexico and Norte del Valle cartel in Colombia to launder US$881m.

The settlement allowed the bank to avoid pleading guilty to any wrongdoing. If HSBC had been proven guilty of criminal action, it could have lost its banking charter in the US.

Top Comments

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  • ChrisR

    Oh dear!

    Another banking fiasco this time from the HSBC in the UK.

    Makes a change from the all the previous disasters then which emanated from the US. Great film about that from a US Director no less.

    Nothing will ever be done about the major banks, they run the world it seems.

    Jul 13th, 2016 - 10:59 am 0
  • brasherboot

    World - do as you're told. We're British

    Jul 13th, 2016 - 12:23 pm 0
  • Enrique Massot

    Too big to fail, eh?
    Good for MP for publishing stories that matter.
    This one offers a rare glimpse on how large corporations flout the law and when getting caught how they get help from their pals in government.
    Only in one country, over 4,000 Argentine had secret accounts--and an investigation in course does not have much chance of progress under the current government.
    What makes us understand what really goes behind the scenes, such as tax avoidance and big money laundering schemes possible lucrative drug and weapons traffic fueling local conflict and other world cancers. Meanwhile, we are offered distraction such as “war on drugs,” “war on terrorism” and other PR operations.

    Jul 13th, 2016 - 07:13 pm 0
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