HSBC Pays record fine: $1.9 Billion

The Justice Department last Tuesday stated that HSBC violated the Bank Secrecy Act by allowing money drug traffickers in Mexico to launder their money through the bank and allowing prohibited transactions with Iran and other nations that have been under sanctions.
In court papers filed in federal court in Brooklyn, the federal government said the case against HSBC is related to the laundering of proceeds from narcotics trafficking via the Black Market Peso Exchange, a method used to convert cash narcotics dollars into Colombian pesos by buying and re-selling wholesale consumer goods.
“The lack of an effective anti-money laundering program at HSBC Mexico and HSBC Bank USA, N.A. contributed to the conduct charged” in the money-laundering case against narcotics traffickers, Justice Department prosecutors said in a court filing.

The court document also states that prohibited transactions with Iran, Libya, Sudan and Burma took place from 2001 through 2006.

HSBC agreed to settle and pay a record fine of $1.9 billion in order to avoid any legal procedure that could deeply impact the bank reputation and cause clients to flock to other banks to avoid being associated with them.  Chief Executive Stuart Gulliver said: "We accept responsibility for our past mistakes," he said. "We have said we are profoundly sorry for them, and we do so again. The HSBC of today is a fundamentally different organization from the one that made those mistakes."

Since the financial collapse of 2008, the government has been actively monitoring banks and even investigating bank’s transactions. As a result, the Securities and Exchange Commission had brought charges against 133 companies and individuals, including 60 CEOs, CFOs, and other corporate officers. Those SEC cases have netted the government $2.6 billion in fines, penalties and other payments.

We all remember Bernie Maddof, the mastermind behind the biggest ponzi scheme ever. He was sent to prison. The funny thing is that even though the government is fining big banks and collecting record fines, none of those banks executives are being held accountable and punished accordingly.

In 2008, big banks and have received funds from the government (taxpayer money) in order to avoid a mettle down. We all hoped that the greed and reckless culture would have vanished with the crisis but looks like we were just living on opium since this culture is deep rooted into Wall St.

When will we see bank executives being sent to jail for reckless behavior? Let’s hope not too late.

This article was written by Kadjolo Coulibaly, Managing Partner at KDL Financial LLC