Stefanie Ostfeld of Global Witness, member of the Task Force, had a great Op-Ed published in The Hill on Tuesday. She outlines the recent HSBC hearing involving money laundering and terrorist financing allegations against the bank. HSBC’s failure to comply with regulations or put in place safeguards against these types of illicit activities not only promotes a dirty global financial system, but it opens up the U.S. financial system to these criminals.
Stefanie believes three steps must be taken. She writes,
First HSBC must commission an external audit to look into how well it is managing money laundering risk. It must then publish the results. Other banks should do so as well. Given all that we have learned about the trustworthiness of banks in the past decade it is natural to no longer trust that they are actually doing what they say. (The recent Libor scandal, which resulted in the resignation of the CEO of Barclays, is the latest example of the banks apparent inability to regulate themselves.)
Second, if HSBC is found to have major breaches in anti-money laundering compliance, U.S. bank regulators must issue serious fines that will impact the bank’s bottom line and, if appropriate, criminal prosecution should be pursued. This is necessary to incentivize banks to change their reckless behavior.
Third, to close the loopholes that enable the banks and criminals to get away with money laundering, Treasury must require banks to identify and verify the ultimate owner of all bank accounts. In addition, Congress should pass the bipartisan Incorporation Transparency and Law Enforcement Assistance Act to stop criminals from misusing American shell companies to hide their identities to launder dirty money through the financial system.
HSBC Exec Announces Resignation During Senate Hearing
ABC, July 17, 2012
Time to tackle money behind Latin American drug cartels
Santa Monica Daily Press, July 17, 2012
How Much Will Mexico Money Laundering Cost HSBC?
Forbes, July 17, 2012
HSBC Says It’s Sorry: Highlights From the Bank’s Senate Hearing
The Wall Street Journal (Blog), July 17, 2012
Report berates Vatican bank, urges serious reform
Reuters, July 18, 2012
Senator Carl Levin (aka “Watchdog of America”) is at it again. Yesterday morning the Senate’s Permanent Subcommittee on Investigations, which Senator Levin (D-MI) chairs, held a hearing to investigate HSBC, the UK-based bank and Europe’s largest financial institution, which has allegedly systematically (and knowingly) lapsed its anti-money laundering systems and allowed suspicious transactions into the United States. According to the subcommittee’s investigative report released Monday, HSBC systematically ignored warnings and failed to stop illegal behavior many times between 2001 and 2010. The report found HSBC accepted deposits into U.S. branches from Mexican drug cartels, Saudi Arabian banks with terrorist ties, and Iranians looking to circumvent financial sanctions.
To me, the most shocking part of all this is not that it happened. Quite the contrary. HSBC—along with its other large bank counterparts—has already been known to aid American citizens evade taxes and knowingly accepted deposits from politically exposed persons in Nigeria, violating about a billion UK laws. So I can’t say I’m surprised.
What shocked me here is not the fact that it happened. And it’s not even that the bank acted subversively when it thought no one was looking. It’s that since 2010, when U.S. officials started—publicly—scrutinizing HSBC’s anti-money laundering controls and ordered a “look back” of thousands of old transactions, the bank not only failed to clean up its act, but—according to an investigation by Reuters—continued to overlook persistent lapses in AML compliance. During the look back, bank managers allegedly specifically “buried” many suspicious cases. According to former employees, the managers focused single-mindedly on “clearing out the paperwork as fast as possible,” handled the reports “like a factory,” and hired “gullible, poorly trained, and otherwise incompetent personnel who were incapable of recognizing blatantly suspicious money laundering activities.” How’s that for diligence?
Govt moves to curb illegal capital flight
The Daily Star (Bangladesh), July 16, 2012
Evidence of illicit financial flows from developing countries placed in Germany
Trust Law, July 15, 2012
HSBC Nears Pact in Launder Probe
The Wall Street Journal, July 15, 2012
Tax evasion, not corporate fraud, at Reebok India?
The Times of India, July 16, 2012
Local rapper Beanie Sigel sentenced to prison for tax evasion
The Philadelphia Inquirer, July 14, 2012
In this video, the United Nations Office on Drugs and Crime follows individual Euro bills as they are used illicitly, ultimately showing the annual $870 billion proceeds from criminal networks. The filmed transactions highlight profits by counterfeiting, illicit drug trafficking, human trafficking, and trading illegal arms. The UNODC also captures the impact of this underground economy on human peace and security.
Tax evasion hotline response beats forecast
Financial Times (UK), July 12, 2012
Govt aims to finalise GAAR rules by end September
Reuters, July 13, 2012
HSBC in spotlight over money laundering
CNN Money, July 13, 2012
We have no interest in being a money-laundering country: Lee Hsien Loong (Interview)
Business Standard (India), July 13, 2012
ISL Docs Allege FIFA’s Havelange, Teixiera Took Millions in Bribes
The Wall Street Journal (Blog), July 12, 2012
Tax justice one step closer
Norwegian Church Aid, July 5, 2012
HSBC to face US lawmakers over money laundering charges
International Business Times (UK), July 12, 2012
Tax Avoider in Chief?
The New York Times (Op-Ed), July 11, 2012
France, Germany tax evasion inquiries target Swiss bank clients
Los Angeles Times, July 11, 2012
Tackling tax fraud and evasion
Europolitics, July 12, 2012
Remember the scene in Office Space when Peter, Michael, and Samir accidentally steal $300,000? They realize they can’t give it back without admitting they stole it in the first place, so they think the only way out is to keep the cash and launder the funds. But three law abiding guys don’t really know how to launder money,, so they try looking up “money laundering” in the dictionary, hoping for a clue of how to do it.
They don’t find an answer and give up on the idea. Bu then again, the dictionary doesn’t exactly give you a step by step guide and those were the days before the prevalence of internet. If the guys had had Google, they may have had better luck.
Today if you Google money laundering you might come across Global Witnesses new handout An Idiots Guide to Money Laundering. It’s a satirical, yet accurate, illustration of how the average person might launder illicit funds.
Lindsey Graham: ‘It’s Really American’ To Avoid Taxes Like Mitt Romney Does
Huffington Post, July 10, 2012
Should the Church evade the issue of tax avoidance?
Institute of Economic Affairs (UK), July 10, 2012
Swiss Banks UBS, Credit Suisse Raided By German, French Authorities Over Tax Evasion
Reuters, July 11, 2012
Tax Evasion in China Exceeds One Trillion Yuan
The Epoch Times (China), July 10, 2012
Hezbollah denies U.S. allegations of money laundering activities
The Daily Star (Lebanon), July 10, 2012
Cross-Posted with permission from Transparency International’s Space for Transparency blog.
The recent global financial crisis highlighted the need to broaden the discussion about regulation and oversight of the financial system. Transparency and related risk assessments of financial institutions have surged to the top of the agenda.
In our study on transparency and disclosure of measures for reducing corruption risk among the world’s largest companies published today, financial companies constitute the single largest industry sector. Among the 24 financial institutions in the survey there are 19 banks, four diversified financial service providers and one insurance company. They are incorporated in 11 different countries: six in the US, four in China, three in Australia, three in the UK, two in Canada and one in each of the following countries: Brazil, France, Germany, Japan, Spain and Switzerland.
We found that as a group, the financial companies are the least transparent of the companies surveyed. In the overall index, financial companies scored on average 4.2. One US and three Chinese companies are among the least transparent of the financial companies assessed. In fact, the financial industry underperformed the sample average in all three dimensions of the study.
The average result in reporting on anti-corruption programmes was 56 per cent, which is the lowest result among all industry groups. While this result reflects the fact that four Chinese banks occupied the last four positions, it is worth mentioning that the remaining financial companies were also below average.
Why the bad score? The reporting we measure is voluntary. Financial companies, although highly regulated, are generally free to choosethe level of public disclosure regarding their anti-corruption programmes.
FBI Says Zetas Laundering Scheme Used BofA Accounts
The Wall Street Journal (blog), July 9, 2012
Follow the Money: Media’s Involvement in Trailing Laundered Money
Nigeria Intel (Civic Media Institute of Nigeria), July 9, 2012
Finance industry’s multimillion-pound lobbying budget revealed
The Guardian, July 9, 2012
How Greek tax evasion helped sink the global economy
The Washington Post (blog), July 9, 2012
Manchester United, the world renowned English football club, is facing hard times financially. Although the club’s world class reputation speaks for itself (19 championships and a home to scores of star footballers), the club still depends heavily on cash flow. In 2005, the Glazer family (also owners of the Tampa Bay Buccaneers) bought out Manchester United from the London Stock Exchange for $1.47 billion, successfully taking on full ownership of the club (despite vehement public opposition.) Now, 7 years later, Man U is facing a massive debt crisis, according to the Associated Press.
United has been looking to raise funds to help reduce debt from the 2005 takeover that was 423 million pounds ($663 million) as of March 31, much of it with interest rates of 8 3/8 and 8 3/4 percent. A $1 billion offering on the Singapore stock market was pursued last year, but the plans were halted due to volatile global markets.
The team, European champions in 1968, 1999 and 2008, has been valued at $2.24 billion by Forbes magazine, ranking it as soccer’s most valuable club for the eighth year in a row.
The Red Devils were on track to their 20th league title this year, taking an eight-point lead in the final weeks of the season. But crosstown rival Manchester City, which became soccer’s biggest spender following its purchase by Sheikh Mansour bin Zayed bin Sultan Al Nahyan of the United Arab Emirates, won the title on goal difference on the final day of the season.
In response to these problems, the Glazers are making some creative ownership decisions. Firstly, they have decided to make an initial public offering (IPO) to the New York Stock Exchange, making shares of the club open to U.S. investors. The intended outcome would generate $100 million to alleviate some of the debt. If the SEC grants them permission to sell its shares on the NYSE, Manchester United would be officially owned by Manchester United Ltd., a holding company that is based in the Cayman Islands. For those who keep up with the current global headlines, a mention of the Cayman Islands triggers one idea: tax havens.
March 19, 2014·
Vancouver, Canada, March 18, 2014 –This year’s TED Prize winner – Charmian Gooch of Global Witness – has announced that she will use the prestigious million-dollar award “to make it impossible for criminals and corrupt dictators to hide behind anonymous companies.” The announcement was made live and online from the TED stage in Vancouver, with support from leading members of the business, political, law enforcement and campaigning community.
March 11, 2014·
Joint NGO Media Reaction Financial Transparency Coalition – Eurodad – Global Witness – Transparency International EU Office – Oxfam Brussels, March 11, 2014 – Today, the European Parliament endorsed the creation of public registers of who really owns companies, trusts and other legal structures. This will make it much harder for criminals, tax evaders, corrupt politicians and other money launderers to hide their identity, and their illicitly-acquired assets, behind anonymous companies and trusts.
February 20, 2014·
Joint NGO media reaction Financial Transparency Coalition – Eurodad - Global Witness - Oxfam A cross political party agreement in the European Parliament ...