HSBC Laundering Money

On December 11th, 2012, HSBC was caught laundering money to Mexico’s Sinaloa cartel and Colombia’s Norte Valle cartel and processing banned transitions to Iran, Sudan, Libya and Burma which will lead to a fine of 1.9 billion dollars in U.S. currency. They also agreed to pay 665 million dollar in civil penalties to regulations.

U.S. federal agents went under investigation on HSBC and found that the London banking giant was helping the Sinaloa cartel launder money and doing illegal transitions to Sudan, Libya, Iran and Burma.

U.S. Assistant Attorney General Lanny Breuer said in an interview for USA Today, “HSBC is being held accountable for stunning failures of oversight, and worse, that led the bank to permit narcotics traffickers and others to launder millions of dollars through HSBC subsidiaries, and to facilitate hundreds of millions more in transactions with sanctioned countries.”

This is not the only time HSBC has been caught on lack of control. Including the laundering act, this is HSBC’s third time being penalized for lack of control. The settlement is the third time in a decade that HSBC has been penalized for lack of control and ordered by U.S. authorities to improve its monitoring of suspicious transactions. Previous directives by regulators to improve oversight came in 2003 and 2010.

“I think HSBC needs to terminate the employment of those who were at the root cause of the illegal activities and hold some sort of ethics meetings and standard check-ins for their employees. It is a global bank, so it would take time to get a system that would work for employees of many backgrounds,” said UHS Teacher Kristen Bartholomew.

As said before, the fine for HSBC’s actions is 1.9 billion dollars. According to HSBC’s Ian Gordon, head of bank research for Investec Securities in London, 1.9 billion dollars is a large number, but very manageable for the bank.

“I’d definitely switch banks if I was a HSBC customer,” said Senior Carlos Rodriguez.

There is not enough information to know if the bank branch had paid off the nearly two billion dollars they were fined. Since this is not the bank’s first time, could they shut the bank down or just let the bank go with another fine they can simply pay off?