“A bad quarter” versus “I could go to jail” – Is it time to indict a few bankers for money laundering?

December 7, 2012, 8:35 am

Reuters reports “Exclusive: HSBC might pay $1.8 billion money laundering fine – sources”.  That’s up from the $1.5B they previously announced as a reserve.

The article reports of leaks that a settlement could include a deferred prosecution agreement with the huge fine.  It then discusses the difficulty prosecutors are having in deciding whether to pursue the fine, which may or may not change behavior, or to actually prosecute a few individual bankers.

Update WSJ reports 12-10-12 an imminent settlement could be for $1.95B, including a deferred prosecution agreement and admission of violating the bank secrecy act.

The pattern in recent years has been to negotiate a fine and impose a deferred prosecution agreement. Yet there seems to be repeat behavior. 

As an aside, DealBook has sources that say Standard Chartered to Pay $330 Million to Settle Iran Money Transfer Claims.  That would be to the feds and is in addition to the $340M they already agreed to pay New York State. If correct, that would be $670M for laundering $250B of Iranian money.

Is there an option other than indicting the bank, which would likely be a death sentence?

Is it time for individual prosecutions?

After the explosions of big financial scandals at the turn-of-the-century, I very clearly noticed the change in how such cases are prosecuted.

Previously, the low-level people in a criminal scheme or financial scandal could trade testimony against their bosses in return for walking away without prosecution. Those have been the rules for decades.

Not anymore.

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