Hsbc Scandal

Topics: Money laundering, United States Senate, Bank Secrecy Act Pages: 2 (716 words) Published: March 24, 2013
The HSBC scandal shook Europe as a whole! Britain’s largest institutional bank was accused of a “drugs and gun-running” scandal. The bank failed to monitor a staggering £38trillion of money moving across borders from places that could have posed a risk, including the Cayman Islands, Switzerland, Iran, and Mexico. One of the highest noted disregards by the bank was their financial dealings with Al Rajhi, the Saudi Arabian bank that was linked with funding the 9/11 terrorist scheme. Another report showed that the bank accepted £9.6billion in cash over two years from subsidiaries without checking where the money came from, showing blunt disregard for the obviousness of the transactions. Mexican and US authorities warning HSBC that there was a volume limit (£4.5billion) in money sent to the US from its Mexican subsidiary that would exemplify “illegal drug proceeds”. A HSBC officer admitted that the accounts in the Cayman Islands were abused by “organized crime”, £1.3billion total. The bank became the subject of a US senate investigation, and they dropped a 335 page report that accused the bank of ignoring all of the warning and safeguards that should have stopped the laundering of money from Mexico, Iran and Syria. In December they agreed on a settlement to pay a penalty of £1.2 billion that would further scorch their already diminished reputation. With the settlement of the fee, comes the bank admitting to violating US laws meant to prohibit money laundering including the Bank Secrecy Act and the Trading with the Enemy Act.

When presented with the 335 page senate report, the head of HSBC’s compliance division, David Bagley, quit in front of the Senate committee. Being at his post since 2002, one can understand why he resigned when pressed with these concerns. He felt guilty being with the bank for so long and did not want to take responsibility for the actions and accusations of the bank. The affair is also an embarrassment for David Cameron, because his trade...
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