The London-based corporation HSBC [4], Europe's largest bank, will pay the US government $1.92 billion in fines for its failure to prevent money laundering through some of its affiliates, including its Mexican branch, US assistant attorney general Lanny Breuer announced at a press conference in Brooklyn on Dec. 11. However, the US Justice Department has decided not to bring criminal charges against the bank. Breuer noted that bank executives faced some penalties. "HSBC has replaced virtually all of its senior management," he said, "and agreed to partially defer bonus compensation for its most senior officials" over a five-year period.
As indicated in a 330-page report [5] by the US Senate in July, Mexican drug cartels were major beneficiaries of the bank's decision not to institute standard precautions against laundering. According to Breuer, the bank "failed to monitor over $670 billion in wire transfers from HSBC Mexico between 2006 and 2009, and failed to monitor over $9.4 billion in purchases of physical US dollars from HSBC Mexico over that same period." "From 2006 to 2010 the Sinaloa Cartel in Mexico, the Norte del Valle Cartel in Colombia, and other drug traffickers laundered at least $881 million in illegal narcotics trafficking proceeds through HSBC Bank USA," Breuer said. Traffickers "would sometimes deposit hundreds of thousands of dollars in cash, in a single day, into a single account, using boxes designed to fit the precise dimensions of the teller windows in HSBC Mexico's branches." The US also accused the bank of circumventing US trade sanctions against several countries, including Cuba, Iran and Sudan.
Analysts indicated that the Justice Department failed to press criminal charges for fear that this would put one of the world's largest banks at risk and might destabilize the international financial system. Since 2010 the Justice Department and the Treasury Department have investigated at least six banks—Credit Suisse, ING and Barclays in Europe, and JP Morgan Chase, Wachovia and Citigroup in the US—for similar failures to monitor transfers. The investigations have brought the US government more than $2 billion in fines, not counting the HSBC settlement, but to date no bank or bank executive has faced criminal charges. (New York Times [6], Dec. 11; US Department of Justice [7], Dec. 11; La Jornada [8], Mexico, Dec. 12, from correspondent)
Noting that HSBC's $1.92 billion fine represents about five weeks' income for the bank, Rolling Stone financial columnist Matt Taibbi proposed in a blog posting that the Justice Department should treat the bank the way it regularly treats "ordinary people involved in ordinary drug cases"—by jailing all the executives involved and confiscating their bank accounts and personal property, along with HSBC's entire holdings. "[B]y approving this settlement," Taibbi concluded, "Breuer removed the government's moral authority to prosecute anyone for any other drug offense. Not that most people didn't already know that the drug war is a joke, but this makes it official." (Rolling Stone blog [9], Dec. 13)
The HSBC case isn't Lanny Breuer's [10] first contact with Mexico's bloody "war on drugs." The New York Times reported in September that the Justice Department had admonished him in connection with Operation Fast and Furious, in which the US allowed thousands of guns to be purchased illegally and smuggled into Mexico, largely for use by the drug cartels. In 2011 he reportedly proposed to Mexican officials that the US and Mexico cooperate in a similar program to monitor illegal gun purchases as a way of tracking gun smuggling operations.
From Weekly News Update on the Americas [11], Dec. 16.
