HSBC is too big to indict for flagrant money laundering, so they get a heavy speeding ticket

HSBC has agreed to pay a fine of $1.9B (yes, billion) for their systemic violations of U.S. money laundering laws.

Tim Fernholz at Quartz calculates that “HSBC’s record $1.9 billion money-laundering fine is the bank equivalent of a stiff speeding ticket”.

The $1.9B is about 2% of their net income last year. He calculates that for an average New Yorker, that would be about $1,105. In N.Y., that’s the fine if you were going more than 31 mph above the speed limit on a third-time offense with previous points on your record.

So, that $1.9B would be comparable to a heavy speeding ticket in New York state.

Just as a wild guess, in California that might be equal to two HOV violations in a construction zone.

That’s a hit, but not devastating.

Here’s a summary of the penalties (from the Wall Street Journal):

Besides forfeiting $1.25 billion in its deal with the government, HSBC also agreed to pay $665 million in civil penalties, including $500 million to the Office of the Comptroller of the Currency and $165 million to the Federal Reserve. The U.S. said the United Kingdom’s Financial Services Authority was pursuing a separate action.

That would be:

  • 1.250b – forfeiture – to U.S. Treasury
  •   .500B – OCC
  •   .165B – FRB
  • 1.915B – U.S. settlement
  • ?.???B – U.K. Financial Services Authority

A few other news articles:

Just what did they do?

Here’s a few comparisons of the fine to what they do.  The Quartz article compares the fine to some of the unsavory practices of HSBC:

It is more than a quarter of the $7 billion in bulk cash deposits the banks transferred from Mexico to the US in 2007 and 2008, which authorities in both countries fear was laundered from drug cartels; however, it is just 13% of the $15 billion in total bulk cash deposits the bank accepted from high-risk affiliates without monitoring.

$7B of drug money moved across the US-Mexico border.

It is 9.6% of the $19.7 billion in undisclosed HSBC transactions with Burma, Cuba, North Korea, Sudan and Iran between 2001 and 2007.

$19B of wires in and out of countries where the U.S. has banned all financial transactions.

It is 73% of the $2.6 billion in “bearer share accounts” hosted at HSBC.

What are those? I’ve never heard of them. 

Prepare to be even more amazed:

These corporate accounts are frequently used for financial wrong-doing because ownership of the company is assigned to whoever has physical possession of the shares. One HSBC client using one of these accounts was convicted of criminal tax fraud after hiding $150 million in assets and $49 million in income.

I had no idea such things existed. 

One of the problems, it seems to me, of laundering really, really big amounts is it so bulky to move tens of thousands of bills.  Moving ten million dollars using US$100 bills would involve one hundred thousand pieces of paper. Band a hundred bills together, then put 5 in a brick means you have to move 200 ‘bricks’ of currency.  A far easier way is to hand over a piece of paper that’s worth $10m. Have a need for, uh, a rather discrete transaction? Visit your nearest HSBC branch.  Apparently they would be glad to help.

Too big to indict?

Corruption Currents at WSJ asks if the bank is too big to indict. The answer is obviously yes.

So they get a heavy speeding ticket.

One Response to HSBC is too big to indict for flagrant money laundering, so they get a heavy speeding ticket

  1. […] HSBC is too big to indict for flagrant money laundering, so they get a heavy speeding ticket […]

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