Risks of overseas cash have increased

March 23, 2013, 8:25 am

If you work in the finance area of a nonprofit with operations overseas, you already know there are lots of risks you have to manage. Risks of having cash moving around have gone up this week.

If you haven’t been following the banking fiasco in Cyprus, might be wise to pay attention for several reasons

First, it’s a good learning tool. 

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Bank facing capital punishment for helping Americans evade taxes

January 5, 2013, 9:59 am

I have a post on my other blog, Attestation Update, discussing a Swiss bank that pled guilty to criminal charges.

One bank gets hit hard for helping U.S. citizens evade taxes. As in capital punishment hard.

I’ve split my discussion of misbehavior by large banks between this blog and the other one. Will start migrating this discussion to Attestation Update, since the topic fits better on that blog.

 


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

December 12, 2012, 12:16 pm

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.

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“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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Standard Chartered Bank admits laundering $250B, will pay $340M fine. By the way, looks like a repeat violation.

September 22, 2012, 9:31 am

Standard Chartered signed a consent decree with the New York Department of Financial Services on September 21.  The signed agreement, which you can read here, acknowledges about $250 billion of wires in approximately 59,000 transactions were “repaired” with the intent of hiding whose money was involved. By way, there is a previous enforcement action that didn’t detect any problem, which tells me this is a repeat violation.

Current settlement

The Wall Street Journal report StanChart Formalizes Settlement in Iran Case describes the settlement. The line that caught my interest is:

Standard Chartered, which contested the allegations when they were filed last month, acknowledged misconduct tied to 59,000 transactions totaling about $250 billion.

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How many stern warnings does a bank get before it winds up in real trouble?

September 12, 2012, 7:33 am

Barclays settled with US regulators over its role in the fiasco about manipulating Libor. I’ve mentioned that mess in my other blog. As a part of that settlement, they signed a deferred prosecution agreement.

They were already on probation for an earlier deferred prosecution agreement for money laundering.

A Wall Street Journal article, Corporate Probation: Punishing or Punting? by Michael Rothfeld, gives the details (article behind paywall).

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Money laundering settlements. Are fines from the U.S. just a cost of doing business?

August 20, 2012, 8:29 am

My previous post described the settlement by Standard Chartered bank with the New York state Department of Financial Services for $340 million over allegations of money-laundering.

I also listed six other settlements I found in two Wall Street Journal articles here and here.

  • $567M – 12-09 – Lloyds TSB Bank
  • $536M – 12-09 – Credit Suise
  • $500M – 5-10 – Royal Bank of Scotland
  • $298M – 8-10 – Barclays
  • $619M – 6-12 – ING Bank
  • $340M – 8-12 – Standard Chartered – settlement with New York regulators
  • $700M announced reserve for settlement – HSBC Holdings PLC
  • $???M – Standard Chartered will have a separate settlement with US authorities

What is going on?

The cases leave me scratching my head wondering what’s going on in the big banks.

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