HSBC Holdings Plc’s reputation was “crushed”
after it agreed to pay $1.92 billion to settle U.S. probes of money laundering in places such as Mexico, Chief Executive Officer
Stuart Gulliver said. “I’ve been in the firm 33 years and this gives
me absolutely no pleasure whatsoever,” he told U.K. lawmakers in London today. “You shouldn’t be under any
illusion as to how seriously we take this and how upsetting this whole thing has been. We’ve crushed our reputation
with the Mexican events.” The settlement included a deferred prosecution agreement with the U.S. Department of Justice.
The U.K.’s Financial Services Authority said the London-based bank will have to employ an independent monitor to oversee
compliance with anti- money launderingrequirements.
HSBC’s Mexican branches had become so well-known to drug traffickers as the place to launder proceeds from illicit sales
that cartels began using special boxes to speed transactions, U.S. prosecutors have said.
Revelations of lax anti-money laundering controls at HSBC are
"shameful and embarrassing" for Europe''s biggest bank, its boss said on Monday, and it may have to pay out well over $2 billion
for the scandal and in compensation for UK mis-selling. HSBC set aside $700 million to cover fines and other costs after a
US Senate report criticised it this month for letting clients shift funds from dangerous and secretive countries, notably
Chief Executive Stuart Gulliver told reporters the ultimate cost could be "significantly higher". "What happened
in Mexico and the US is shameful, it''s embarrassing, it''s very painful for all of us in the firm," he said on a conference
call. "We need to execute on the compliance changes and then prove ourselves worthy and rebuild this over a number of years.
There are no quick and easy fixes."
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
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
HSBChas been fined $27.5 million
(17.76 million pounds) in Mexico for lax controls in its anti-money laundering systems, a week after being slammed for allowing
clients to shift funds from dangerous and secretive countries in a scathing U.S. Senate report. The fine by Mexico's National
Banking and Securities Commission (CNBV) was due to "non-compliance with anti-money laundering systems and controls" and related
to late reporting of 1,729 unusual transactions, failing to report 39 unusual transactions, and 21 administrative failures.
Prosecutors in the US and Mexico have banks in their crosshairs
for helping drug smugglers and money launderers transfer and hold their illegal earnings.
HSBC and other major banks have been accused of helping launder money for the narco
criminals seen waging a brutal war in Mexico largely to win drug markets in the United States. HSBC officials say they are
cooperating with investigators...
The accusations come as Mexican and US authorities have ramped up crackdowns on
transnational crime rings’ vast earnings. Government prosecutors say they are chasing down drug profits and more aggressively
targeting the financial institutions that let those profits amass in their vaults.
A US Senate investigation has accused HSBC of laundering $7 billion, transferring
funds for Mexican clients through accounts in the Cayman Islands to accounts in the US.
blocked bank accounts containing several hundreds of millions of dollars in a money-laundering probe involving Uzbek nationals,
the attorney general's office said Wednesday. "The attorney
general has frozen several hundreds of millions of francs (dollars) in different Swiss bank accounts as part of this investigation,"said Jeannette Balmer, a spokeswoman for the office
known as the MPC. Individuals close
to Uzbek President Islam Karimov are at the centre of the probe, Radio Television Suisse (RTS) reported.
Chase & Co's compliance with U.S. anti-money laundering laws is being reviewed by a banking regulator, a source said,
making the largest U.S. bank the latest target of a wide investigation of how banks prevent transactions involving drug money
and sanctioned countries.
Office of the Comptroller of the Currency, an independent branch within the Treasury Department, is examining JPMorgan's systems
that are designed to monitor and filter such transactions, said the source, who is familiar with the situation...
The latest investigation comes in the midst of stepped-up efforts by
regulators to crack down on money laundering, including transfers of drug money through bank networks and funds from countries
facing international sanctions such asIran.
The Tax Justice Network (TJN), a British-based policy institute, determined
that $21 trillion to $32 trillion in private funds are currently socked away in tax havens. The biggest contributor is China,
which has offshored at least $1.2 trillion. Russia, Korea, Brazil and Kuwait round out the top five. Although U.S. citizens
are small-timers when it comes to offshoring, our banks play a big part in the movement of global wealth to tax havens. TJN
statistics suggest that, of the top 10 banks for global offshoring, five -- Goldman Sachs, Bank of America, Wells Fargo, Morgan
Stanley, and JPMorgan/Chase -- are based in the U.S.
Standard Chartered, the British bank, has agreed to pay New York’s
top banking regulator $340 million to settle claims that it laundered hundreds of billions of dollars in tainted money for
Iran and lied to regulators...
Mr. Lawsky based his case, in large part, on claims that the
bank had violated state law by masking the identities of its Iranian clients, lying to regulators and thwarting American efforts
to detect money laundering. Particularly
difficult for the bank, people with knowledge of the settlement talks said, was a trove of e-mails and memos detailing an
elaborate strategy devised by the bank’s executives. An e-mail from a lawyer to bank executives in 2001 said that payment
instructions for Iranian clients “should not identify the client or the purpose of the payment,” according Mr.
The list of global banks that
have been accused in recent years of laundering foreign transactions totaling billions of dollars has been growing —
Credit Suisse, Lloyds, Barclays, ING, HSBC — and now Standard Chartered...
What the cases have in common
is that the accused banks took advantage of a law that was not changed until 2008 and that allowed banks to disguise client
identities and move their money offshore. The cases, including one filed this week by New York’s banking regulator against
Standard Chartered, also cast a harsh light on just how much activity with Iran was permitted in the years leading up to 2008
and whether the practices had violated the spirit, if not the letter, of the law.
$21 trillion of unreported private financial wealth was owned by wealthy individuals via tax havens at the end of 2010. This
sum is equivalent to the size of the United States and Japanese economies combined.
be as much as $32 trillion of hidden financial assets held offshore by high net worth individuals, according to our report
The Price of Offshore Revisited, which is thought to be the most detailed and rigorous study ever made of financial assets
held in offshore financial centres and secrecy structures.
these numbers to be conservative. This is only financial wealth and excludes a welter of real estate, yachts and other non--financial
assets owned via offshore structures.
for the Tax Justice Network by former McKinsey & Co Chief Economist James Henry comes amid growing concerns about an enormous
and growing gulf between rich and poor in countries around the globe. Accompanying this research is another study by TJN,
entitled Inequality: You Don't Know the Half of It, which demonstrates that all studies of economic inequality to date have
failed to account properly for this missing wealth. It concludes that inequality is far worse than we think.
Wealth doesn't trickle down – it just floods offshore, new research
reveals. A far-reaching new study suggests a staggering $21tn in assets has been lost to global tax havens. If taxed, that
could have been enough to put parts of Africa back on its feet – and even solve the euro crisis
Cash-strapped countries are putting increasing
pressure on private banks to help them claw back money from tax evaders...For years,governments turned a blind eye to their wealthiest citizens squirrelling away their riches in such tax havens. But
since the global economic meltdown, cash-strapped governments are scrabbling around for revenue, and Switzerland has been
one of the first places they have looked.
Question: how did an African
politician, on an official salary of roughly $6,000 a month, manage to acquire the lifestyle of a Hollywood billionaire, partying
at the Playboy mansion, travelling in private jets, and living at a $30m Malibu mansion filled with impressionist artwork,
and surrounded by its own private golf course?
Answer: simple. First, that politician was lucky
enough to be Teodoro Nguema Obiang, heir apparent to the autocratic dictator of Equatorial Guinea, a tiny country in West
Africa which since discovering huge oil reserves in the mid 1990s has acquired the dubious distinction of having one of the
world’s most spectacularly-corrupt governments.
Secondly, Obiang was able to find a pair of high-flying
Beverly Hills lawyers who – in exchange for extravagant fees - were prepared to set up an opaque string of shell companies
that allowed him to secretly control dozens of US bank accounts through which tens of millions of his ill-gotten dollars could
An FBI afidavit says that the Mexican drug cartel
has been reportedly funneling cash through a Texas-based racehorse business with BofA accounts. The U.S. government has describedLos Zetas in the past as "the most technologically advanced, sophisticated and dangerous
cartel operating in Mexico." In the past, Mexican drug syndicates have allegedly used BofA accounts to buy planes to transport
cocaine... Between 2004 and 2007, the bank was also the alleged destination for almost $10 million in illicit fundsfrom an influential political family in Equatorial Guinea.
BofA has admitted
such errors in the past. In 2006, officials acknowledged they'd failed to catch South American clients laundering $3
billionthrough one of its Manhattan branches...
been accused of any wrongdoing, and...is cooperating with the FBI investigation.
International measures to counter the laundering of looted wealth have not had a significant
impact, despite their apparent strength. Evidence, including an original case study of Papua New Guinea, suggests that only
a small fraction of funds derived from corruption are intercepted. This effectiveness gap is caused principally by the laxity
of banks in controlling wire transfers and the willingness of corporate service providers to supply untraceable shell companies.
Current policy evaluation fails because it equates inputs with effectiveness and does not include clear measurement of results.
This can be remedied by testing the ease of making suspect transactions or forming shell companies, using either audit studies
or field experiments. Two such studies of shell company formation show that rules mandating sensitivity to customer corruption
risk are ineffective. Such studies are cheap, practical, and suitable for use by development agencies and their partners in
Convictions for money laundering is the measurement
ultimately used by governments around the world to measure success. Yet with few exceptions, countries are failing. Sometimes
the limiting factor is expertise. But too often shortcomings revolve around local corruption and a lack of political will.
Just compare the amount of money laundered worldwide with the number of reported convictions (only a handful in any given
year). It saddens me to say that for a money launderer to be caught and convicted, he or she is either very careless or very
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