HSBC dodges US money laundering charges
HSBC has escaped charges of money laundering by US officials due to fears by the Department of Justice (DOJ) it might create a “global financial disaster”.
A US Congressional report shows that UK officials, including Chancellor George Osborne, used their clout to warn the US it could lead to market unrest.
According to the BBC, the report alleges the UK “hampered” the probe and “influenced” the outcome. HSBC was accused of letting drug cartels use US banks to launder funds.
HSBC paid a $1.92 billion settlement but no one, including top officials, faced criminal charges.
The report says: “George Osborne, Chancellor of the Exchequer, the UK’s chief financial minister, intervened in the HSBC matter by sending a letter to Federal Reserve Chairman Ben Bernanke… to express the UK’s concerns regarding US enforcement actions against British banks.”
The letter says that prosecuting HSBC could have “very serious implications for financial and economic stability, particularly in Europe and Asia”.
Few people emerge from the episode covered in glory.
The report accuses former US Attorney General Eric Holder of misleading Congress about the decision. It says Holder ignored the recommendations of more junior staff to prosecute HSBC because of the bank’s “systemic importance” to the financial markets, according to the BBC.
In addition, the report says: “Rather than lacking adequate evidence to prove HSBC’s criminal conduct, internal Treasury documents show that DOJ leadership declined to pursue [the] recommendation to prosecute HSBC because senior DOJ leaders were concerned that prosecuting the bank ‘could result in a global financial disaster’.”
As a result, DOJ and HSBC reached the settlement, which some politicians regarded as being too soft.
Sound of silence
The 2012 settlement with HSBC revealed the bank violated US sanctions by doing business for customers in Burma, Cuba, Iran, Libya and Sudan.
According to the BBC’s research, HSBC accounts were also used by the Sinaloa drug cartel in Mexico and Norte del Valle cartel in Colombia to launder $881 million.
The settlement meant HSBC avoided pleading guilty to any misdemeanours. If the bank had been found guilty of the financial crimes, it could have lost its banking charter in the US.
HSBC, US regulators and the UK Treasury have all declined to comment.