The British bank, HSBC Holdings plc (ADR) (NYSE:HBC), said that it would be pay a record $1.9 billion to settle claims of the bank’s money laundering activities. The US government says that HSBC’s US unit accepted billions of dollars from the Mexican drug cartels, Iran, and other groups and then transferred the money to be used in the US. The fact of the matter is that the US has sanctions against Iran and the drug cartels, making the bank’s actions illegal.
One of the tipping off points for regulators was the fact that HSBC has directed 25,000 Iranian transactions, totaling over $19 billion, in a week’s time into the US. Additionally, during 2007 and 2008, HSBC in Mexico sent the US unit $7 billion to be used in the US system. US Senators maintain that this amount suggests that they were “illegal drug proceeds” (USA Today).
To make matters even worse, US Senators in the Investigations committee say that HSBC also was in talks to help Saudi Arabian banks and, the worst of all, helped fund al-Qaeda and other terror groups. HSBC officials have apologized for the incident and have said to have spent over $290 million to fix the bank’s laundering policies, as well as fired a few employees who were at “potential money laundering risks”.
This is a pretty serious offense that breaks both the Bank Secrecy Act and the Trading With the Enemy Act and could lead to the bank shutting down. To make matters worse, on Monday, British bank, Standard Chartered, was accused of attempting to launder money for the Iranian government. Standard Chartered was forced to pay $340 million to settle the charges.
Interestingly enough, these two international banks are only two in the list of foreign banks the US government has slapped laundering fines on. Since 2009, the US has forced Credit Suisse, Barclays and Lloyds to make payments to settle potentially criminal charges of money laundering. However, these banks were not laundering money for some of the US’s top enemies in the world.
To recap, HSBC’s US unit was found to have laundered money for the Iranian government, the Mexican drug cartels, Saudi Arabia and al-Qaeda along with other terror groups. This warrants a much more strict response from the US government, in my opinion. If an international bank is laundering money for your greatest enemies in the world, it is time to kick out that bank and file criminal charges for putting US national security at risk.
The bottom line here is stay away from HSBC. The bank had to pay a record $1.9 billion in fines; in addition to the $290 million the bank said it spent to fix the laundering issue. These large payments will most certainly hurt the already hurting British bank.
To be fair, the US Senate report also blames US regulators for not properly taking action after a report leaked that hinted to the possibility of money laundering. The main idea here is stay away from HSBC. Those fees are going to be felt for awhile and they assisted America’s biggest enemies in today’s world.
Disclosure: None