'Drugs cartels used HSBC to launder cash'
Stephen Foley is a former Associate Business Editor of The Independent, based in New York. He left in August 2012. In a decade at the paper, he covered personal finance, the UK stock market and the pharmaceuticals industry, and had also been the Business section's share tipster. Between arriving with three suitcases in Manhattan in January 2006 and his departure, he witnessed and reported on a great economic boom turning spectacularly to bust. In March 2009, he was named Business and Finance Journalist of the Year at the British Press Awards.
Friday 04 May 2012
HSBC is facing potentially explosive allegations that South American drug cartels have used it to launder money, and that the bank systematically and deliberately failed to install the systems needed to catch illegal transactions.
The scale of US authorities' investigations into HSBC has so far only been hinted at in the bank's regulatory filings, but leaked documents show that prosecutors are looking into a wide range of alleged failings.
In one instance, the bank allegedly failed to raise any red flags when Drug Enforcement Administration agents posed as drug dealers deposited millions of dollars in Paraguayan banks and then transferred money to accounts in the US through HSBC.
The bank also continues to do business with so-called "casas de cambio" in Mexico, local currency exchanges used to send money abroad, without any of the proper systems for spotting suspicious transactions, it is claimed. The casas are often used by the country's vicious drug gangs, the DEA believes.
Documents from an investigation by the US Attorney's office in West Virginia were reported yesterday by Reuters. In a letter urging the federal Department of Justice to take action, a West Virginia official claimed HSBC was to previous money laundering failures "as a nuclear waste dump is to a municipal land fill".
HSBC has disclosed that its internal controls are under investigation by the DoJ, the Federal Reserve, the Office of the Comptroller of the Currency, the Manhattan district attorney, the Office of Foreign Assets Control and the Senate Permanent Subcommittee on Investigations, and that criminal or civil penalties are likely.
"We continue to co-operate with officials in a number of ongoing investigations," HSBC said. "The details of those investigations are confidential, and therefore we will not comment on specific allegations."
These documents reportedly allege that from 2005, the bank violated the Bank Secrecy Act and other US anti-money laundering laws by not adequately reviewing hundreds of billions of dollars in transactions for any that might have links to drug trafficking, terrorist financing and other criminal activity.
The food poverty scandal that shames Britain: Nearly 1m people rely on handouts to eat – and benefit reforms may be to blame
US Navy christens huge $3 billion destroyer ship USS Zumwalt that appears as a fishing boat on enemy radar
Scottish independence: It is the English who should be on their knees, begging the Scots to vote ‘No’
Nigel Farage fatigue? Half of voters ‘immune’ to Ukip’s appeal
Nigel Farage on Have I Got News For You: Ukip leader ridiculed over expenses and party 'fruitcakes'
Nigel Farage: I’m taking on the status quo, and the Establishment’s fighting back
- 1 Poveglia: 'World's most haunted island' up for auction...is anyone brave enough to buy it?
- 2 Big Bang Theory to get special Star Wars episode with help from Lucasfilm
- 3 Pharrell Williams 'Happy': British Muslims dance to song in video
- 4 24 people applied for the 'world's toughest job', here are their interviews
- 5 Scientists warn we've hit 'peak beard': The more people grow facial hair, the less attractive it is
iJobs Money & Business
£40000 - £50000 per annum + BONUS + BENEFITS: Harrington Starr: A leading, Cit...
£35000 - £50000 per annum + Bonus + Benefits: Pro-Recruitment Group: You must ...
£45000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: Corporate Acti...
£350 - £400 per day: Harrington Starr: An opportunity has arisen at a FCA regu...