On HSBC: What’s the Going Punishment for Laundering Drug Money?

What’s the going punishment for laundering drug money? If you’re one of the world’s largest banks, it’s about six weeks’ worth of earnings and no jail time for your executives. Not too bad for committing a felony, no?

Iowa Senator Charles Grassley and the former Inspector General of the Treasury Department’s Troubled Assets Relief Program (TARP) think the Department of Justice is letting HSBC off the hook for aiding and abetting terrorists and drug traffickers. Their view: a civil fine of $1.9 billion doesn’t really accomplish anything:

  • The bank – and many of its executives – made a lot of money on this activity, and they should be punished
  • The Justice department wouldn’t hesitate to file charges against the CEO of a corporation that pollutes – why should this be any different?
  • Congress didn’t say “money laundering is a crime, other than for the big banks”
  • The fine may be for a record amount, but it’s not punishing enough to change conduct

[Link: Grassley: HSBC Should Face Criminal Charges [Video] – Bloomberg Law]

For your reference, here’s a brief roundup of legal commentary and analysis of the settlement:

Record $1.92 Billion in Fines and Penalties Levied against HSBC (Ballard Spahr LLP):

“The HSBC fines and penalties are the largest amount ever paid for [anti-money laundering (AML) and Office of Foreign Assets Control (OFAC)] violations and may well be a harbinger of stricter AML/OFAC enforcement and higher penalties for institutions that violate these laws and regulations. The actions against HSBC and Standard Chartered send a very strong message to banks and nonbank financial institutions that they must take the necessary steps to ensure their continued AML and OFAC compliance.” Read on>>

Record Fines against HSBC for Repeated Bank Secrecy Act and OFAC Violations (Davis Wright Tremaine LLP):

“HSBC failed to implement controls to safeguard a variety of services, including but not limited to correspondent accounts, embassy banking, wire transfers, automated clearinghouse (transfers, banknotes, lockboxes, clearing of bulk traveler’s checks, bearer share accounts, pre-paid cards, foreign exchange, cash letters, international pouch activity, and remote deposit capture.” Read on>>

Banks Behaving Badly or Brother Can You Spare A Billion (or Two)? (Thomas Fox):

“But there is another reason for the specific terms of the HBSC settlement, which was discussed by Lanny Breuer [announced by Lanny A. Breuer, Assistant Attorney General of the Justice Department’s Criminal Division] during [a recent] news conference. He stressed the extraordinary cooperation by HSBC during the investigation in addition to the structural changes the bank put in place as noted above. If the DOJ wants to obtain the highest level of cooperation from a defendant during an investigation, turning around after such cooperation and indicting either the entity or a bunch of its employees will most probably end such a level of cooperation.” Read on>>

Find additional law news and updates regarding HSBC at JD Supra>>