The accusations from Argentina's tax authority that London-based HSBC laundered over $100 million may pale in comparison to that of the bank's US - Mexico case, but they raise the specter that someone from HSBC could finally go to jail. The charges, announced by the head of Argentina's tax collection agency, Ricardo Echegaray, on March 19 include tax evasion and money laundering totalling up to $120 million.
The City of London is the money-laundering centre of the world's drug trade. UK banks and financial services have ignored so-called "know your customer" rules designed to curb criminals’ abilities to launder the proceeds of crime. A National Crime Agency (NCA) threat assessment stated: "We assess that hundreds of billions of US dollars of criminal money almost certainly continue to be laundered through UK banks, including their subsidiaries, each year."
"Wachovia's blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations," said a federal prosecutor. Yet the total fine was less than 2% of the bank's $12.3bn profit for 2009. The conclusion to the case was only the tip of an iceberg, demonstrating the role of the "legal" banking sector in swilling hundreds of billions of dollars – the blood money from the murderous drug trade in Mexico and other places in the world – around their global operations.
Wachovia made a habit of helping move money for Mexican drug smugglers. Wells Fargo & Co., which bought Wachovia in 2008, has admitted that its unit failed to monitor and report suspected money laundering by narcotics traffickers – including cash used to buy four planes that shipped a total of 22 tons of cocaine. The admission came in an agreement that Wachovia struck with federal prosecutors, and it sheds light on the largely undocumented role of U.S. banks in contributing to the violent drug trade that has convulsed Mexico. (See also: Wachovia's Drug Habit)
While cocaine production ravages countries in Central America, consumers in the US and Europe are helping developed economies grow rich from the profits, a study claims. The vast profits made from drug production and trafficking are overwhelmingly reaped in rich "consuming" countries – principally across Europe and in the US – rather than war-torn "producing" nations such as Colombia and Mexico. And its authors claim that financial regulators in the west are reluctant to go after western banks in pursuit of the massive amount of drug money being laundered through their systems.
Appearing at a Senate Banking Committee hearing, Sen. Elizabeth Warren (D-MA) grilled officials from the Treasury Department over why criminal charges were not filed against officials at HSBC who helped launder hundreds of millions of dollars for drug cartels. “HSBC paid a fine, but no one individual went to trial, no individual was banned from banking, and there was no hearing to consider shutting down HSBC’s activities here in the United States,” Warren said.
A money-laundering investigation as big as the bank itself ended with a deferred prosecution agreement that allowed HSBC to escape criminal charges and suffer only a fine. This while the US Department of Justice was jailing non-bankers by the dozen for laundering drug money, including cash from the Sinaloa cartel, which had been a prime HSBC co-conspirator. HSBC got a pass on helping the Sinaloa bunch acquire an airplane that was used to smuggle drugs by the ton. (See also: HSBC has form: remember Mexico and laundered drug money)
In July 1989, the leaders of the economic powers assembled at the G7 Paris summit decided to establish a Financial Action Task Force (FATF) to counter money laundering as an effective strategy against drug trafficking by criminal ‘cartels’. However, since the inception of the international anti-money laundering (AML) regime there is a growing awareness that the regime is not working as well as intended.
Last week, managers from Britain's biggest bank, HSBC, lined up before the Senate's permanent sub-committee on investigations. Europe's largest bank ignored warning signs about money-launderers. The notion of any dichotomy between the global criminal economy and the "legal" one is fantasy. Worse, it is a lie. They are seamless, mutually interdependent – one and the same.
A settlement deal with the British banking giant HSBC is the ultimate insult to every ordinary person who's ever had his life altered by a narcotics charge. Despite the fact that HSBC admitted to laundering billions of dollars for Colombian and Mexican drug cartels (among others) and violating a host of important banking laws (from the Bank Secrecy Act to the Trading With the Enemy Act), the Justice Department elected not to pursue criminal prosecutions of the bank, opting instead for a "record" financial settlement of $1.9 billion, which as one analyst noted is about five weeks of income for the bank.
The deal was announced quietly, just before the holidays, almost like the government was hoping people were too busy hanging stockings by the fireplace to notice. Flooring politicians, lawyers and investigators all over the world, the U.S. Justice Department granted a total walk to executives of the British-based bank HSBC for the largest drug-and-terrorism money-laundering case ever. Yes, they issued a fine – $1.9 billion, or about five weeks' profit – but they didn't extract so much as one dollar or one day in jail from any individual, despite a decade of stupefying abuses.