U.S. report says HSBC handled drug money and other illicit funds

July 17, 2012 by · Leave a Comment
Filed under: Legal News 

I need to get my hands on the report, please link it in the comments if you find it.   The Senate committee did not try and pull any punches on this report according to the Reuters story.  Sadly, the only part of the story that surprised me was how direct the language is.   It is not new that people have used banks for laundering money and funding operations that are politically unpopular.   Let us not for get Citibank that has been caught a few times dealing in different markets, handling funds from darker elements of society.

I hope we decide to do more than make reports, but actually use it to enforce the rules.    In the end, attacking the black market itself will do the most in the long run to combat these funds.   The only problem is that in the United States at least, we would need to admit that 50 years of policy what the incorrect prescription and do a complete 180 to go after these markets.   I don’t know what the ultimate solution is but I know it starts with reducing the obscene profits that attracted the organized crime elements.

Reuters – A “pervasively polluted” culture at HSBC Holdings Plc allowed the bank to act as financier to clients seeking to route shadowy funds from the world’s most dangerous and secretive corners, including Mexico, Iran, the Cayman Islands, Saudi Arabia and Syria, according to a scathing U.S. Senate report issued on Monday.

While the big British bank’s problems have been known for nearly a decade, the Senate probe detailed just how sweeping the problems have been, both at the bank and at the Office of the Comptroller of the Currency, a top U.S. bank regulator which the report said failed to properly monitor HSBC.

“The culture at HSBC was pervasively polluted for a long time,” said Senator Carl Levin, chairman of the U.S. Senate Permanent Subcommittee on Investigations, a Congressional watchdog panel.

The report comes at a troubling time for a banking industry reeling from a multi-country probe into the manipulation of global benchmark rates. Last month, rival British bank Barclays Plc agreed to pay a $453 million fine to settle a U.S.-British probe into the rigging of the benchmark interest rate known as the London interbank offered rate, or Libor.

The Senate probe provides a rare look at how HSBC responded when confronted with numerous cases of suspect money flows.

The report caps a year-long inquiry that included a review of 1.4 million documents and interviews with 75 HSBC officials and bank regulators. It will be the focus of a hearing on Tuesday at which HSBC and OCC officials are scheduled to testify.

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