Learn About Illicit Financial Flows
Key Terms

The HSBC Deferred Prosecution Agreement: Just how much money are we really talking about?

December 13, 2012

By Heather Lowe

Heather Lowe is the Director of Government Affairs at Global Financial Integrity, Member of the Financial Transparency Coalition

flickr /  ell brownHSBC Bank USA N.A. and HSBC Bank Holdings plc, its parent company, agreed to forfeiture and penalties of a little more than $1.9 billion dollars for systemic and willful violations of U.S. anti-money laundering and foreign sanctions laws. $1.9 billion may sounds like a lot, but does the penalty fit the crime?

We are going to present you a series of excerpts from the Statement of Facts, which constitutes Attachment A to the Deferred Prosecution Agreement entered into between U.S. regulators and the HSBC banks, and let you decide for yourself. These are excerpts detailing events that HSBC explicitly has admitted to.

Excerpt 1: Just how much money are we really talking about?

The press has been reporting that HSBC USA allowed $670 billion in wire transfers from Mexico through the bank without legally required money laundering controls, $881 million of which has been directly linked to money laundered by Mexican and Columbian drug cartels.  These reports understate the problem by a few hundred trillion dollars:

Paragraph 10 of the Statement of Facts:

10. There were at least four significant failures in HSBC Bank USA’s AML program that allowed the laundering of drug trafficking proceeds through HSBC Bank USA:

  • a. Failure to obtain or maintain due diligence or KYC information on HSBC Group Affiliates, including HSBC Mexico;
  • b. Failure to adequately monitor over $200 trillion in wire transfers between 2006 and 2009 from customers located in countries that HSBC Bank USA classified as
  • “standard” or “medium” risk, including over $670 billion in wire transfers from HSBC Mexico;
  • c. Failure to adequately monitor billions of dollars in purchases of physical U.S. dollars (“banknotes”) between July 2006 and July 2009 from HSBC Group Affiliates, including over $9.4 billion from HSBC Mexico; and d. Failure to provide adequate staffing and other resources to maintain an effective AML program.

You can read the whole Statement of Facts here. We will be bringing you many more excerpts from it over the next few weeks.

Attribution Some rights reserved by ell brown

Share

Disclaimer: Unless specifically stated to be the views of the Financial Transparency Coalition, the opinions expressed on this blog are solely the opinions of the individual blogger and are not necessarily those of the Financial Transparency Coalition.

Latest Press Releases

$2 lost for every $1 gained: New report shows global financial system fails developing countries

Eurodad · December 18, 2014

Developing countries are losing twice as much money as they earn because of issues like tax evasion, profits taken out by foreign ...

Eurodad and Tax Justice Network Named to List of “Global Tax 50”

Financial Transparency Coalition · December 17, 2014

WASHINGTON D.C.—The Financial Transparency Coalition congratulates two members of its Coordinating Committee who were named to the International Tax Review’s “Global ...

EU compromise tightens regulation on shell companies, but without public access, many still in the dark

Financial Transparency Coalition · December 17, 2014

BRUSSELS — In a deal reached last night, parliamentarians and campaigners have succeeded in making company ownership a fundamental topic. While EU ...