Tuesday, 11 December 2012

Senior HSBC bankers need to face jail for their bank’s role in laundering drugs money; fining the bank won’t work

11 December 2012

Today, Europe’s largest bank, HSBC, announced that it will pay $1.9 billion (£1.2 billion) to settle allegations that it laundered money for drugs cartels, terrorists and pariah states. During approximately the same period that HSBC failed to check whether the dollars it was shipping from Mexico to the US were drugs money, 47,000 people died at the hands of Mexican drugs traffickers.

“Fines alone are not going to change banks’ behaviour: the chances of being caught are relatively small and the potential profits from accepting dodgy clients are too big.  Fines are seen as a cost of doing business,” said Rosie Sharpe, campaigner at Global Witness. 

“Instead, regulators should hold senior bankers legally responsible for their banks’ money laundering performance.  At the very least, senior bankers should be prevented from working in the industry, akin to the way in which doctors can be struck off.  Bonuses should be clawed back, and, in the most serious cases, senior bankers should face jail,” said Sharpe. 

According to the chair of the US Senate Subcommittee, HSBC’s culture was ‘pervasively polluted’.  The number of drugs cartels in Mexico makes it a high risk for money laundering.  HSBC Mexico had high risk clients such as money remitters and offered high risk products such as dollar accounts in the Cayman Islands.

Despite this, HSBC US treated its Mexican affiliate as low risk.  The result was that HSBC's Mexican operations moved $7bn in physical cash into the US between 2007 and 2008. Instead of prosecuting senior bankers, however, the US Department of Justice has entered into a ‘deferred prosecution agreement’ with the bank, in which the bank is essentially granted immunity from prosecution in exchange for doing what they should have been doing all along.  “If you get caught with your hand in the till you go to jail, but if you’re a big bank and you’re caught breaking the law, it seems that all that happens is you’re fined and told you’ll go to jail if you do it again,” said Sharpe. 

Yesterday the UK’s Home Affairs Select Committee said that fines against banks that aided money laundering and drugs trafficking were not enough. The Committee recommended personal, criminal liability for those who hold the most senior positions in banks that are found to have been involved in money laundering.

As well as prosecuting senior HSBC bankers, bonuses should be clawed back.  Lord Green was appointed HSBC chief executive in 2003 and chairman in 2006, and is now the UK Trade Minister.  “We estimate that Lord Green pocketed more than £25 million in bonuses and shares during his time at HSBC, despite the fact that the bank’s own criteria for awarding bonuses is meant to take into account adherence to ethical standards; he should return this money,” said Sharpe.  

HSBC accepted responsibility for its past mistakes and stated that it had comprehensively changed its approach to anti-money laundering compliance. The bank will be monitored by the Department of Justice for the five year term of the agreement. 

Contact Group on Piracy off the Coast of Somalia Meets in New York

Media Note
Office of the Spokesperson
Washington, DC
December 10, 2012

The United States will join partners from nearly 80 countries, international organizations, and the private sector at the United Nations in New York on December 11 for a plenary meeting of the Contact Group on Piracy off the Coast of Somalia.

The plenary, hosted by India, will be the thirteenth gathering of this innovative diplomatic forum.  Since its initial meeting in January 2009, the Contact Group has nearly tripled in size − a testament to the global consensus that piracy poses a shared security challenge to maritime safety and to the need for further concerted and coordinated international action.  Among its accomplishments to date, the Contact Group has:

•    Facilitated coordination of an unprecedented international naval effort from more than 30 countries working together to protect transiting vessels.

•    Partnered with the shipping industry to improve practical steps merchant ships and crews can take to avoid, deter, delay, and counter pirate attacks.  The shipping industry’s use of Best Management Practices and the increasing use of Privately Contracted Armed Security Personnel are among these measures, which continue to be the most effective deterrents against pirate attacks.

•    Strengthened the capacity of Somalia and other countries in the region to counter piracy, in particular by contributing to the UN Trust Fund Supporting Initiatives of States Countering Piracy off the Coast of Somalia; and,

•    Advanced a new initiative aimed at disrupting the pirates’ financial and logistical networks ashore through approaches similar to those used to target other types of organized transnational criminal networks.

To learn more about U.S. support for international efforts against piracy, visit www.state.gov/t/pm/ppa/piracy/index.htm and www.thecgpcs.org.