7/17/12, "HSBC executives to apologise at US Senate hearing," BBC
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7/16/12, "HSBC Helped Terrorists, Iran, Mexican Drug Cartels Launder Money, Senate Report Says," Forbes, Fontevecchia
"A Senate report released ahead of the embargo time revealed that HSBC’s lax anti-money laundering policies allowed Mexican drug money, Iranian terrorist money, and even suspicious Russian money to enter the U.S. and gain access to U.S. dollar liquidity over the last couple of years.
The report, released late on Monday despite a 10 PM embargo time, was prepared by the Permanent Subcommittee on Investigations, and counted with the support of Senators Carl Levin and Tom Coburn.
In a year-long investigation, the Subcommittee found that HSBC violated several rules, exposing the U.S. financial system to “a wide array of money laundering, drug trafficking, and terrorist financing.” According to the report, HSBC’s Mexican affiliate channeled $7 billion into the U.S. between 2007 and 2008 which
- possibly included “proceeds from illegal drug sales in the United States.”
HSBC actively circumvented rules designed to “block transactions involving terrorists, drug lords, and rogue regimes.” In one case, “two HSBC affiliates sent nearly 25,000 transactions involving $19.4 billion through their HBUS [HSBC’s U.S. affiliate] accounts
- over seven years without disclosing the transactions’ links to Iran.”
They provided U.S. dollar financing and services to banks in Saudi Arabia and Bangladesh that were tied to terrorist organizations, while also clearing $290 million in “obviously suspicious travelers cheques” that benefitted Russians “who claimed to be in the used car business.”
Furthermore, the investigation showed how the bank’s regulator, the Office of the Comptroller of the Currency (OCC) failed to take a single enforcement action against HSBC despite numerous violations by the international bank. Among them,
- failing to monitor $60 trillion in wire transfer and account activity,
- a backlog of 17,000 unreviewed account alerts regarding potentially suspicious activity, and
- a failure to conduct anti-money laundering due diligence before opening accounts for HSBC affiliates.
Senator Levin...was hard on both HSBC and their regulator:
Due to poor AML [anti-money laundering] controls, HBUS exposed the United States to Mexican drug money, suspicious travelers cheques, bearer share corporations, and rogue jurisdictions. The bank’s federal bank regulator, the OCC, tolerated HSBC’s weak AML system for years. If an international bank won’t police its own affiliates to stop illicit money, the regulatory agencies should consider whether to revoke the charter of the U.S. bank being used to aid and abet that illicit money.*
The Senate’s Subcommittee will reveal its findings on Tuesday during a Congressional hearing that will include testimony by HSBC officials and federal regulators. This report is the latest in a string of embarrassments for the world’s major banks. Only a few days ago, JPMorgan’s Jamie Dimon finally revealed further details on the so-called London Whale trades (which reportedly cost the bank more than $5 billion), while the on-going Libor manipulation scandal sparked a series of lawsuits that could be difficult to swallow for Barclays and other institutions involved."...
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*Ed. note: Mr. Levin just said US regulators (OCC) were in effect complicit in the crime, didn't check one thing the bank did. US Treasury and therefore the US government saw no problem, so why would anyone close the bank down as Levin suggests?
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7/16/12, "Senate report: HSBC 'allowed drug money laundering'," BBC
"The report also concludes that the US bank regulator, the Office of the Comptroller of the Currency, failed to properly monitor HSBC.
The report into HSBC, released ahead of a Senate hearing on Tuesday, says huge sums of Mexican drug money almost certainly passed through the bank.
Suspicious funds from Syria, the Cayman Islands, Iran and Saudi Arabia also passed through the bank....
The report into HSBC was issued by the Senate Permanent Subcommittee on Investigations, a Congressional watchdog that looks at financial improprieties.
The year-long inquiry, which included a review of 1.4 million documents and interviews with 75 HSBC officials and bank regulators, will be the focus of a hearing on Tuesday at which HSBC executives are scheduled to testify.
These will include HSBC's chief legal officer Stuart Levey, who joined the bank in January and was previously one of the top officials on terrorism and finance at the US Treasury Department."...
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Ed. note: So top US Treasury official Stuart Levey under whose tenure HSBC engaged in terrorist financing through the US
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Levey was a failure at what they claim was his specialty:
1/24/2011, "Point Man on U.S. Sanctions to Depart," WSJ, Jay Solomon
"When Stuart came [into the Obama administration], he agreed to stay for six months, and it's been two years. There's no perfect time for these things. But this is as good a time as any" to make the change, Treasury Secretary Timothy Geithner said....
A Harvard-trained attorney, Mr. Levey, 47 years old, said he is taking time off before deciding on his next job. He said his letter of resignation would arrive at the White House Monday and that he would stay on at Treasury for about one more month....
Since 2004, he has also built up Treasury's Office of Terrorism and Financial Intelligence into a major cog in the U.S. national-security apparatus, with more than 700 people involved in activities such as tracking illicit financing and approving export licenses for sensitive technologies.
Treasury officials now have a prominent seat in virtually every national-security debate.
"Stuart built the U.S. government's effort to combat terrorist financing from the ground up, and created a highly effective, world-class organization that has made Treasury an integral player in U.S. national-security policy," said Tom Donilon, Mr Obama's national-security adviser.
Mr. Levey's strategy has specifically focused on using international companies' needs for the U.S. dollar, and their fears of being barred from the American financial system, as leverage to gain their cooperation....
In 2006, the Bush administration succeeded in virtually freezing North Korea out of the international financial system after publicly accusing a Macau-based bank, Banco Delta Asia S.A.R.L., an arm of Delta Asia Financial Group, of laundering money on Pyongyang's behalf....
"If these big banks make mistakes, and find they're being unwittingly used by the Iranians to finance weapons systems or terrorism, it's a real blow to their reputations," said Henry Paulson, who oversaw Mr. Levey's work as President George W. Bush's last Treasury secretary. "That's a pretty big club.""...
- [Ed. note: It's the exact opposite of what Paulson claims. HSBC easily advanced terrorism and other crimes under Levey's watch. Not once were suspicious HSBC transactions checked, parag. 7 in Forbes article. They can say it's OCC's fault but the bottom line is Levey wasn't the big guy who came in and stopped banks from doing this.]
Still, Messrs. Levey and Cohen acknowledged that America's adversaries are continuing to adapt to U.S. financial measures and that the ultimate impact of long-term sanction campaigns remains unclear."...
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