
 Outrageous HSBC Settlement Proves the Drug War is a Joke - phaer
http://www.rollingstone.com/politics/blogs/taibblog/outrageous-hsbc-settlement-proves-the-drug-war-is-a-joke-20121213
======
flexie
Lawyer here. Every time I have a new client I have to obtain picture ID, check
their share registers etc. Doesn't matter that most of my clients are
entrepreneurs, startups or venture funds. Doesn't matter that all their
transactions go through banks that have already checked the transactions and
the people involved once and that all transactions are ultimately registered
in public registers such as the commerce register.

If I were suspecting that a client's transaction was part of some tax evasion
scheme, European Union law would require me to report it to the authorities
(although it's not clear that these requirements are in themselves lawful).

All this nonsense costs lots of time and money for me and ultimately for my
clients.

Meanwhile, it turns out that the scumbags who actually launder money, do it
more or less out in the open and they are not even put to jail.

~~~
cynicalkane
The regulatory environment HSBC is operating in is more or less the regulatory
environment you're complaining about. The law requires HSBC to monitor
billions of wire transfers, to breathe down the neck of suspicious persons
using their banks, and monitor all of its branches for criminal activity, and
they basically did that--but not as much as the US demanded. You don't send an
executive to jail because a guy several layers down did something wrong, and
popular outrage _feels_ the executive should, somehow, be personally and
criminally responsible for that.

The idea that HSBC executives are guilty of... violating the article author's
feelings about how anti-drug law should work, or something... is why you don't
get your financial news from an unbalanced liar in Rolling Stone magazine. But
even Taibbi can't seem to identify what precisely the executives are guilty
of, an important prerequisite to prosecution in a nation governed by the rule
of law.

As for the regulations, they are the reason why you can't open an account or
move large amounts of money without giving the bank enough information to know
a substantial portion of your entire financial history, and giving the bank
permission to freeze your accounts approximately whenever they feel like it or
whenever the government demands. You can think this is a good thing or a bad
thing, but since you, Mr. Lawyer, complain about _you_ having to burden
yourself with the responsibility of knowing your client, surely you feel it's
unfair that banks have to do the same thing? Not to mention the privacy
implications.

~~~
Fuxy
In America a company is considered an individual/has a social security number
correct?

Then you should be able to seize that individuals assets and while you can't
send a company to jail you can bankrupt it.

If we're going to consider all companies as people then all laws should be
applied to said people.

~~~
mattdeboard
Well, ok, then what do you do with all the money sitting in deposits in the
bank? Just mail a check back to people?

This is why the executives should be criminally chargeable. Banks _are_
systemically important, but the executives are not.

~~~
dragonwriter
> Well, ok, then what do you do with all the money sitting in deposits in the
> bank?

There's a couple ways you could handle a "corporate death sentence" applied to
a bank: 1\. You could treat it as if the bank had failed completely -- all
assets are forfeited, but customers receive refunds on insured (e.g., covered
by FDIC) accounts only up to the amount insured. This would create some risk
for large depositors, which could be considered bad, or could be considered
good as it would encourage large depositors to take an active interest in how
banks are run which would create pressure on behavior which would reduce the
likelihood of needing to impose sanctions.

2\. You could treat it as a facilitated sale of the corporation itself --
either in one unit or split into pieces with different buyers -- with any
proceeds going to government rather than the shareholders.

------
rms
This news has been happening for a while. All the way back to the First Opium
War.
[http://en.wikipedia.org/wiki/The_Hongkong_and_Shanghai_Banki...](http://en.wikipedia.org/wiki/The_Hongkong_and_Shanghai_Banking_Corporation)

Sadly, many massive crimes against humanity go unpunished when commited by
corporations. Compare the crimes of HSBC to the crimes of Pfizer.
[http://www.fbi.gov/boston/press-
releases/2009/bs091509b.htm](http://www.fbi.gov/boston/press-
releases/2009/bs091509b.htm) [http://www.sfgate.com/business/article/Huge-
penalty-in-drug-...](http://www.sfgate.com/business/article/Huge-penalty-in-
drug-fraud-Pfizer-settles-2759293.php)

The laws of the USA suggest that corporations that are convicted of two
felonies are subject to a corporate death penalty, but given the continued
non-punishment of perniciously malicious companies like HSBC and Pfizer, don't
expect the US Department of Justice to act anytime soon.

~~~
seiji
US drug laws are actually just about keeping people who may vote for democrats
out of the voting pool wrapped around a layer of public health stigma and
"scary minorities terrorizing white people" images.

~~~
jaynos
Yet Democrats don't come out against Draconian drug laws because...well, I
don't know...let's go with bipartisanship.

~~~
seiji
Well, all the drug laws started in the early 1900s and their rationale is
forgotten unless you find a documentary or do research somewhere.

For example, the reason opium dens were outlawed in San Francisco is because
they got very popular with the chinese laborers and that upset the white
establishment. So, the white lawmakers got together and made a campaign about
"chinese men on drugs are stealing your white women." Soon after, SF outlawed
opium dens to punish the chinese workers for, well, the falsely manufactured
epidemic of all upper class white women falling in love with chinese railroad
workers and leaving their white husbands in shame.

The ruling class has a mind of continuance and more restriction, not clearing
out the cruft from long ago.

~~~
bananacurve
For fuck sake. What claptrap do you have to explain every other fucking
country banning opium?

~~~
riffic
The Single Convention, pushed into the UN by American prohibitionists.

~~~
bananacurve
And signed and ratified by all those poor helpless victim countries.

~~~
riffic
under duress with the likelihood of the withdrawal of aid, trade, or
unilateral sanctions. You do realize the united states is a permanent member
of the security council?

------
jzwinck
Too big to fail is too big. Would it really be so bad if we simply outlawed
companies exceeding a certain number of employees? HSBC recently had about a
quarter of a million people, which is just insane. When things get that big,
nobody fully understands what is going on anymore, even at a basic level, and
it does become plausible that terrible actions are taken with literally no one
to blame, either because nobody is sure where the blame lies, or because the
would-be accusers are scared of the systemic risk (which these days is very
real).

I propose that twenty thousand people ought to be enough for any company.
Having more, smaller firms will improve the job market for individuals, reduce
the burden of mega-powerful interests in government acting against the
population as a whole, and provide more genuine opportunities for real
leadership to a greater number of people.

A gradual phase-in could be used, say max 500K employees by 2020, 200K by
2025, 100K by 2030, 50K by 2035, and 20K by 2040. And no funny business: one
person cannot have a controlling interest in companies whose employee counts
exceed the limit in aggregate.

~~~
chollida1
> I propose that twenty thousand people ought to be enough for any company.

This seems foolish.

Better tell McDonalds, IBM, Target, HP, GE, Pepsi, Coke, Home Depo, and
Berkshire Hathaway they are now too big to fail.

Oh and dont' forget google, they have more than 20,000 employees, better break
them up.

Actually why not just look down this list to see just how foolish your 20,000
person proposal would be:

[http://money.cnn.com/magazines/fortune/fortune500/2012/perfo...](http://money.cnn.com/magazines/fortune/fortune500/2012/performers/companies/biggest/)

Note that by the time you get to company 49 they still employ more than
126,000 people.

 __EDIT __Sorry I guess my point wasn 't clear. My point is that employee size
is a very poor measure of a company being "too big to fail".

Let me lay it out like this. Consider a fictitious burger company with 20,000
employees. With 50 states it can only employ 400 people in each state. If it
went bankrupt it's very hard to see how this is "too big to fail".

~~~
jzwinck
The proposal is foolish because it would impact a substantial number of
businesses? I don't understand the logic: if it impacted few or no businesses,
then it would be pointless. Since it is impactful, then it is foolish?

Recall that I gave a timeline of some two decades for phased implementation.
Also note that a franchise model could serve many retail stores well. Subway
sandwich shops are roughly as numerous as McDonalds, but the corporations
themselves have nowhere near the same number of employees. A franchise model
could be used for roughly half the companies in your list.

Isn't it more foolish to have dozens of companies that would destroy large
parts of the country if something went really wrong with them? Haven't we
learned that lesson by now?

------
tibbon
5 weeks of income. Let's say that again, 5 weeks.

Now, 1.9B isn't _nothing_ , but for a company with this type of income, and a
market cap of around £130B, and profits in the 10's of billions... it
approaches it.

Can you imagine an individual being arrested for this type of behavior, and in
the end losing only 5 weeks of income with no jailtime?

Too big to fail. Too big to arrest. Too big to shutdown. Congrats to the
banking industry, you've won.

~~~
Guvante
Bad comparison, you cannot compare their total income to the fine, you have to
compare their estimated profits from the scheme to the fine.

If they estimated they have made $1 billion from the scheme, doubling that is
a little lenient, but not totally out of the question.

Unfortunately it is impossible to judge the situation without all of the
facts. Nearly anything sounds damning when you know that guilt is involved.

~~~
tibbon
But if I'm caught selling something illicit, my personal fine isn't based off
a 2x multiplier of the potential profit. That type of basis only acts as a
deterrent if they are caught for their actions at least 50% of the time.
Otherwise, if a company could successfully do something like this 3 times, and
only get caught once- then it is rational that they should do it more.

~~~
Guvante
I did say the fine was lient, 2x is awfully small. However comparing it to the
total profits of the company is silly.

Personal things are different, laws have an easier time sticking hard
penalties to people. You can't throw a company in jail, for a number of
reasons. And since it is hard to pin anybody for it, you have to go back to an
"appropriate" fine.

~~~
tibbon
I guess in my mind what I'm thinking is that individuals are often decimated
by criminal/civil judgements, as sometimes are small/medium companies, yet we
almost never see legal action threaten the real survival or profitability of a
massive company.

Just as people are hugely disincentivized to do illegal activity for fear that
it will totally destroy their lives. Companies however have no such fear.
There's little personal liability, and at worst there's a ding to profit for
the year and investors grumble a bit. But overall, its just a headache- not a
severe deterrent to acting poorly in the end.

I mean, what if we did actually throw executives in jail? Even for short
periods of time (3-6 months?) It could create a culture where from the top
they would have incentive to support only completely above-board behavior.

------
retube
Ah Matt Taibbi... guaranteed unbiased reporting on banks.

It's not clear whether any employees knew they were facilitating money
laundering. What HSBC has been found guilty of (and what they are being fined
for) is lacking sufficient controls to detect money laundering activity. This
is quite different to wilfully and knowingly assiting money laundering for
drug cartels.

All sorts of businesses are part of the cash economy and pay in large amounts
of cash on a daily and weekly basis. The worst critiscm you can level here is
that a lowly-paid cashier was insufficiently trained to spot potentially
dubious sources of cash that were being paid in.

Actually reading the whole article... it's just sensationalist drivel. There
is no claim compliance officers were laundering money. In fact a compliance
officer goes no where near money. Bonus clawback is in reponse to weak
controls, not becuase they were in the employ of drug cartels.

~~~
milkshakes
Actually, HSBC has openly admitted to knowingly and willfully taking active
steps[#] to disable specific automated countermeasures put in place to prevent
money laundering, as well as deliberately under-staffing departments
responsible for AML compliance. There is little question as to their guilt or
complicity.

[#]: [http://www.justice.gov/opa/documents/hsbc/dpa-
attachment-a.p...](http://www.justice.gov/opa/documents/hsbc/dpa-
attachment-a.pdf)

~~~
retube
> to knowingly and willfully taking active steps[#] to disable specific
> automated countermeasures

I can't see that anywhere in the link.

~~~
dalke
Point 17: "From 2006 to 2009, HSBC Bank USA knowingly set the thresholds in
CAMP so that wire transfers by customers located in countries categorized as
standard or medium risk, including foreign financial institutions with
correspondent accounts, would not be subject to automated monitoring unless
the customers were otherwise classified as high risk."

From point 16, CAMP is the "Customer Account Monitoring Program" automated
system which monitors wire transfers.

-> Therefore, HSBC Bank USA knowingly took "active steps to disable specific automated countermeasure."

Point 19 "Despite this evidence of the serious money laundering risks
associated with doing business in Mexico, from at least 2006 to 2009, HSBC
Bank USA rated Mexico as standard risk, its lowest AML risk category. As a
result, wire transfers originating from Mexico, including transactions from
HSBC Mexico, were generally not reviewed in the CAMP system." (Point 18
establishes that "Between 2000 and 2009, HSBC Bank USA, and its executives and
officers, were aware of numerous publicly available and industry-wide
advisories about the money laundering risks inherent to Mexican financial
institutions")

-> Therefore, HSBC willfully disabled specific automated countermeasures.

=> Combine these two "therefore"s, and you'll see that milkshakes's statement
is confirmed.

Or look at points 64-66, which establishes that HSBC Bank plc bypassed the
automated system which detects funds transfers involving a Sanctioned Entity.
They would put a "cautionary note in their SWIFT payment messages" the the
messages would "[fall] into what HSBC Europe termed a “repair queue” where
HSBC Europe employees manually removed all references to the Sanctioned
Entities." HSB know about this since 2000, and their compliance group spoke up
about it in 2003.

=> So there were at least two automated systems where "specific automated
countermeasures" were "knowingly and willfully" bypassed.

These weren't all that hard to find - I looked for the word "automated".

~~~
mike_hearn
Whether a country is "high risk" or not is not some well defined standard,
it's an entirely subjective opinion. The US Government might have liked to
consider Mexico high risk, but they aren't the ones who have to do all the
investigative work on every transaction. If you look at the FATF-GATI
(international AML org) recommendations, they have their own list of which
countries are "high risk" (and Mexico has not been on it lately, as far as I
recall).

What the USG is saying here is they think HSBC should have been treating
internal HSBC-to-HSBC transfers as high risk and reviewing them all. But this
doesn't make much sense for a single company. The lack of it certainly cannot
be equated to a deliberate "disabling" of controls.

With respect to the repair queue, this is due to America's insane approach to
sanctions - a transfer from country A to country B where there are no
sanctions on B in A, that happens to get routed via a US bank, would have
sanctions applied, despite that no laws were being violated by either party to
the transaction. In order to work around this brain damage EU banks routinely
edited ("repaired") wire transfers to avoid hitting the Great Firewall of
America, safe in the knowledge that they were not violating any sanctions laws
where they lived.

Later, the US decided that jurisdiction was such a bothersome concept they
decided that anyone who made a transfer to Iran, anywhere, regardless of local
laws at the time, was guilty of money laundering. See also: Standard Charter.

I don't think people here seem to realise the general backstory here. The US
Government _lies all the time_. They routinely get innocent people to plead
guilty without any kind of trial by threatening them with absurdly over-harsh
penalties. The HSBC case is a classic example of this dynamic in action.

~~~
dalke
I'm quoting from a statement of facts, so technically the USG isn't the only
one saying this. See #2, "HSBC Bank USA and HSBC Holdings hereby agree and
stipulate that the following information is true and accurate."

That is, that HSBC agrees that the information provided by the State
Department, the April 2006 Financial Crimes Enforcement Network (“FinCEN”)
Advisory, the money laundering lawsuits involving two of their customers, etc.
from #18, and that this is "evidence of the serious money laundering risks
associated with doing business in Mexico, in #19.

You cannot go from "well defined" to "entirely subjective". There are points
in between, and to argue otherwise is bad style.

"this doesn't make much sense for a single company" \- technically these are
different companies, though some are wholly owned by others. That aside, some
internal HSBC-to-HSBC transfers were illegal: "From at least 2000 through
2006, HSBC Group knowingly and willfully engaged in conduct and practices
outside the United States that caused HSBC Bank USA and other financial
institutions located in the United States to process payments in violation of
U.S. sanctions."

Now, you're absolutely right that this is an "insane approach to sanctions."
(We've switched from Mexico to the Middle East, btw, but that doesn't make a
difference.) But you've just argued that communications with HSBC Mexico to
HSBC Bank USA were a "single company", so it's a bit disingenuous to say that
HSBC Europe is not part of the same company.

There's a nasty problem with jurisdiction, yes, but there are legal ways to
resolve it. For one, stop doing business with US banks. But few want to do
that, and the SWIFT network (and Snowden's disclosure of documents of how the
US is systematically undermining the SWIFT-agreement) make it a gnarly process
to completely disentangle from the US.

What you said is different. You wrote "EU banks routinely edited ("repaired")
wire transfers to avoid hitting the Great Firewall of America, safe in the
knowledge that they were not violating any sanctions laws where they lived."
But point #67 says that "HSBC Group Affiliates intentionally hid the practice
of amending payments involving Sanctioned Entities from HSBC Bank USA. As a
result, during the relevant time period, HSBC Bank USA and other financial
institutions in the United States processed hundreds of millions of dollars in
transactions involving Sanctioned Entities in violation of U.S. sanctions."

You are right - they didn't break the law where they lived. But according to
the statement of facts, you are also wrong - they sent transfers through the
"Great Firewall of America", and caused HSBC Bank USA to break US law by not
being able to provide the required compliance.

Regarding Standard Chartered, the London-based bank sent the funds through its
New York unit, which is how both US _and_ New York laws applied. It's not the
case that the US was suing a foreign bank with no US ties.

"The US Government _lies all the time_. ... They routinely get innocent people
to plead guilty without any kind of trial by threatening them with absurdly
over-harsh penalties"

While the first is certainly true (see previous, with the US undermining the
SWIFT agreement), that doesn't mean it's true all the time, or appropriate for
this case. Again, technically this is a statement of facts agreed upon by both
sides, and not one-sided accusations from the government.

Which leads to the second half of what I quoted from you. The US could be
threatening to shut down HSBC Bank USA should they not comply, and this is the
best HSBC could do under the circumstances. The reason I disagree with you
here is that HSBC has plenty of legal, political, and economical resources to
defend themselves against flagrantly false accusations.

Standard Chartered, for example, doesn't say that they were innocent. Their
defense is that there were only $14 million which did not comply with the
U-turn regulations. (This was an initial number. The final judgment after
investigation was $133 million.). They paid a $674 million fine, which is
about 5x of the $133 in prohibited transactions or 10x of the original $14m.
BTW, the original USG claim was that "as much as $250 billion" was laundered.

In other words, no, this doesn't seem like a "classic example of this dynamic
in action." The classic examples are for people with no resources, poor legal
defense, and a judge that doesn't care. Not HSBC where a fine of $1.9 billion
represents 5 weeks of profit.

------
skyraider
Everyone here seems really eager to take the DOJ at face value. Wow. Quite a
reversal.

In order to get anywhere, the DOJ _has_ to charge HSBC with willful
violations. So of course the government alleges that the violations were
willful. Everyone here seems perfectly willing to accept those accusations,
and every allegation in the DPA, regardless of the level of evidence presented
in court.

The knee-jerk reaction here seems to be that if someone running a corporation
is alleged to have a subpar compliance program, it's all part of a giant
willful conspiracy.

This DPA raises the interesting question of what constitutes sufficient
AML/KYC compliance. Fine. It looks like HSBC had a subpar program, which is
illegal, even though there aren't precisely defined standards for AML/KYC in
terms of what's adequate at scale. But people here are still really eager to
criminally prosecute people for _failing to prevent money laundering._

This is hugely different from knowingly helping drug cartels, which is what
HSBC is being accused of in the media.

------
rayiner
All the HSBC settlement proves is that prosecutors like cases where they have
IRC transcripts of someone ordering hits. That's why drug cases are so popular
compared to white collar cases. Its easy to prove that some guy had a ton of
cocaine and that's all the law requires. Much harder to prove that someone
intended to facilitate money laundering (especially in a county where its easy
to get caught up in that accidentally).

It is simply the nature of white collar crimes, where the illegality of
conduct usually depends on what the person was thinking, that it will be
prosecuted less strongly than other kinds of crimes. This is a feature, not a
bug.

Also, I love how people on here seem to think that only terrorists and
cyberlibertarian money launderers deserve due process. E.g. Perlpimps comment
that we should infer purely from circumstances intent that is either
criminally negligent or affirmatively corrupt.

~~~
amirmc
I think you missed the part where they _chose_ not to indict HSBC and the
reasons for doing so. There doesn't seem to be much ambiguity about the actual
money-laundering. The linked NY Times post has more info.

[http://mobile.nytimes.com/blogs/dealbook/2012/12/10/hsbc-
sai...](http://mobile.nytimes.com/blogs/dealbook/2012/12/10/hsbc-said-to-
near-1-9-billion-settlement-over-money-laundering/)

~~~
rayiner
So what? Convicting a corporation on federal charges can have an impact
grossly disproportionate to the charge. The conviction of Arthur Andersen
destroyed a $10 billion/year company, put tens of thousands of people out of
work, cost the economy of Chicago immensely, all over the actions of a handful
of partners at the firm. There are situations where convicting a corporation
is appropriate, but in the HSBC case there was very little evidence that
anyone actually intended to do anything wrong. The settlement was entirely the
appropriate outcome in this case.

~~~
jkn
I don't understand your position on HSBC's guilt. There is plenty of evidence
that they have intentionally weakened their AML program. When they rated
Mexico with the lowest AML risk in contradiction to every indicator in the
industry, they knew of the consequences. They knew it would facilitate money
laundering (by definition), in one of the hottest drug trafficking region.
Does it matter so much that their ultimate goal was to make money rather than
launder money? Of course money laundering was not an end in itself. That's
probably why "willfully fail to establish and maintain an effective AML
program" was made a crime: to give legislation some teeth in precisely a case
like this, no?

~~~
mike_hearn
No, you keep saying this. There is NO consensus that Mexico is high risk. In
fact the consensus is that it isn't. Go look at this list:

[http://www.fatf-gafi.org/topics/high-riskandnon-
cooperativej...](http://www.fatf-gafi.org/topics/high-riskandnon-
cooperativejurisdictions/documents/fatf-public-statement-oct-2013.html)

The FATF (Financial Action Task Force) co-ordinates AML regulations around the
world. Note that Mexico is not on the list. Nor has it been there for a long
time.

What's more, HSBC classified Mexico as standard risk but this did not override
account level risk markers, it just meant they were not attempting to manually
investigate every single wire transfer in or out of Mexico, an impossibly vast
job. Wire traffic between US and Mexico is vastly larger than between, say, US
and Algeria.

HSBC did not do anything wrong here.

~~~
jkn
The absence of Mexico from the FATF blacklist simply means that Mexico makes a
good effort at implementing the FATF recommendations. Which makes sense since
Mexico is a FATF member (I don't think there is a single FATF member in the
FATF list of high-risk and non cooperative countries). It doesn't account for
the high risk of money laundering associated with the social context of drug
trafficking (this was also the government's point I think).

For what it's worth, the 2009 IMF report on Mexico's FATF compliance[1]
identifies a lot of issues regarding Mexico's AML process (see the ratings
table starting at page 311).

Reading the Statement of Facts, I personally find the evidence compelling that
there was a lot of blind eye turning at HSBC to say the least. Just one
example:

 _When suspicious activity was identified, HSBC Mexico repeatedly failed to
take action to close the accounts. Senior business executives at HSBC Mexico
repeatedly overruled recommendations from its own AML committee to close
accounts with documented suspicious activity. In July 2007, a senior
compliance officer at HSBC Group told HSBC Mexico’s Chief Compliance Officer
that “[t]he AML committee just can’t keep rubber-stamping unacceptable risks
merely because someone on the business side writes a nice letter. It needs to
take a firmer stand. It needs some cojones. We have seen this movie before,
and it ends badly.”_

(BTW I don't "keep saying this". It was my first comment on the topic. You
probably confused me with milkshakes or dalke.)

[1]
[http://www.imf.org/external/pubs/ft/scr/2009/cr0907.pdf](http://www.imf.org/external/pubs/ft/scr/2009/cr0907.pdf)

------
perlpimp
I am just wondering why did Dread Pirate Roberts go to jain and Lanny Breuer
did not. Both were facilitators of Illegal narcotics trade, except what HSBC
did was orders of magnitude larger scale than that of what Silkroad did.

One can argue that the people were removed from knowing exact nature of all
transactions but trust me this won't float - you either recklessly incompetent
or insidiously corrupt and involved in what is happening, especially when it
happens on this scale.

regardless, war on drugs is more or less like prohibition - way to control the
masses without loosing face in front of elderly conservative public - who
votes.

~~~
brohee
How many hits did Lanny Breuer order?

Even if I kinda like the idea of Silk Road, I can't help but think DPR will
get what he deserved...

------
brohee
Not sure that mixing asset forfeiture laws and non-prosecution of industrial
scale money launderers make for a clear argument...

But the rich escaping with a slap on the wrist where the poor gets jail time
is nothing new, if I was any more lefty I'd say it's paving the way for a
hardcore revolution, but then it's been going on for decades, people are just
too apathetic...

~~~
koide
Saying it's nothing new is nothing new. Let's change that mentality!

And revolutions usually take many generations to get to a boil. In these days
given information flows a lot faster, it's going to take two or three instead
of ten or fifteen generations.

It's just like scientific ideas, they become mainstream when the status quo
defenders who are mistaken die.

~~~
brohee
Thankfully people are more interested in Lindsay Lohan latest binge drinking
bout than in how some get away with making billions of money laundering...

No revolution is coming, at least as long as the people are entertained, and
not too hungry.

~~~
koide
Oh, everyone's apathetic, so, why bother?

You're part of the apathy. Not a great way to bring change.

Nevertheless, as the rest of the world shows, there are people interested in
change (see Kiev, Egypt, among others)

Heck, even the Occupy movement showed there are people in the US itself
worried about change.

I wouldn't discount a massive revolution in our lifetime. It depends on how
hard and how far politicians and oligarchs push, and on the other hand, on the
appearance of appropriate leaders.

~~~
brohee
"It depends on how hard and how far politicians and oligarchs push"

As long as they give scraps of the pie to enough people, nothing will happen.
Lets get realistic, 99% of HN lectorate benefits from the status quo, me and
likely you included...

------
lifeisstillgood
They turned off the money laundering alarm systems for over 200 trillion (yes
tr-illion) - much of it from _mexico_.

Come on - prosecute this one.

I remember an article about the new form of journalism at the end of the
Rockefeller/Morgan era, where detailed and specific highlighting of the
outrageous crimes brought about notable social change.

Perhaps this is the first story of the new wave - I would like to think so
because only corrupt banking can get money cleaned for criminals - and
cryptolocker is just the first of a new wave of crime.

~~~
rcarrigan87
Here is the article I believe you're referring to. Really enjoyed it as well.
The slant of Rolling Stone's "journalism" makes me worry though. Any article
where while reading you get progressively more angry is most likely heavily
one-sided. That's why you come to the comments section, to bring yourself back
down to earth and realize these issues are complex and multifaceted and the
answers (prosecute all!) aren't always that cut and dry. Would love to see a
more balanced account of this HSBC scandal.

[http://www.bbc.co.uk/blogs/adamcurtis/posts/WHAT-THE-
FLUCK](http://www.bbc.co.uk/blogs/adamcurtis/posts/WHAT-THE-FLUCK)

~~~
lifeisstillgood
yes thank you, it was an Adam Curtis - cheers

------
anom9999
The moment you push any kind of culture underground you automatically make it
harder and more expensive to control. So the smarter move would be to legalise
the less harmful drugs but create a safe, controlled environment for sale and
usage.

While some of the more conservative people out there might disagree with
people taking drugs, the fact remains that people do want to get high and thus
those people will always find way to do so. To me, it makes more sense not to
turn those people into outlaws and instead concentrate your efforts on
tackling those who turn to drugs for non-recreational reasons (eg resolving
addiction and/or peoples dependency on stimulants for escapism. Those
individuals usually have other real life issues and -wrongly- turn to drugs as
their "fix").

This will never happen though because drugs are given such a bad connotation
in the press as the roots of all evil. Not all drugs are equal; whose which
are proven to be relatively harmless compared to tobacco or alcohol are given
the ridiculous label of "gateway drugs" \- as if anyone who smokes two puff of
a joint will automatically end up on the streets shooting heroin. If we want
people off the harder drugs then we have to teach kids that not all drugs are
equally bad - and to do this we need governments to send a saner political
message about their stance on drugs.

From a personal perspective, I've done a few "magic mushrooms" at festivals in
my younger years. They made me a little giddy but at no point did I rape,
steal nor murder. In fact I was more pleasant company than when I've been
drinking (and I'm not a rude drunk by any means). Yet since then, the UK
government has made magic mushrooms illegal. It's just absurd to think that my
previous actions, which were entirely harmless at the time, are now illegal.
And when kids experiment (as many kids often do) they too will learn that
government legislation is broken towards "softer" drugs. Which will make then
re-evaluate their opinion about their governments stance on all drugs. So the
government are really just wasting their own time and our public money by
continuing on this charade that all recreational chemicals are evil.

The most hypocritical thing of all though, is I bet a great many of those in
power have smoked weed at some point when they were teenagers / young adults
(as we saw in the UK with the amusing yet frustrating confessions a few years
back where several politicians came forward and admitted to "smoking but not
inhaling". _sigh_

~~~
dobbsbob
Actually Clinton is allergic to smoke, and was well known on campus for making
hash cookies which is why he said 'never inhaled' because he ate weed instead.
Too bad he went on to throw countless people in prison for doing exactly what
he used to do.

~~~
anom9999
> "Actually Clinton is allergic to smoke, and was well known on campus for
> making hash cookies which is why he said 'never inhaled' because he ate weed
> instead."

UK != US. So it stands to reason that I wasn't talking about Clinton
specifically. But it's amusing to see the same stories happening on both sides
of the pond.

------
Mikeb85
When you think about what HSBC actually did, you realize it really is a joke.
Whining about banks is de rigueur nowadays, but what HSBC did is far less
nefarious than it's being presented...

Imagine if you faced fines or jailtime if a criminal simply used your product.
Let's say I run a McDonalds, and a drug dealer buys a burger from me, then all
of I sudden I helped them launder money? Because that's what 'laundering'
money really is, simply the legitimizing of illegitimate funds. HSBC is simply
being extorted by the US because somewhere along the line a criminal used a
bank account (and of course HSBC is one of the most international of all
banks, and operates in many countries where law enforcement is poor at best).
If every business that ever aided a criminal, or ever did business with a
criminal were prosecuted, there wouldn't be any businesses left.

Plenty of you buy and sell bitcoins, imagine if you were prosecuted because
your bitcoins where once used to buy drugs? How would you feel then? (and this
is actually a fairly probable outcome)

Admissions of guilt on HSBC's part? Doesn't mean they're guilty, only means
they plead guilty to avoid worse prosecution/extortion...

Edit - furthermore, I find it hilarious that people will rail against the NSA
and American surveillance, yet call for the heads of HSBC execs for not spying
on and policing their clients enough...

~~~
jomtung
I agree with your example being a joke because McDonalds cheeseburgers cannot
be traded for illicit services and goods as easily as laundered cash. They've
admitted to systemic corruption and taken month of revenue in fines because of
it simply because the DOJ is too lazy to actually fix the problem. This is a
horrible stain on the record of the DOJ and is tantamount bribery disguised
with legalese. Trying to sugar coat it doesn't change that fact.

~~~
mike_hearn
DOJ did not drop it because they are too lazy. They were chomping at the bit
to prosecute. Go read up on the background to this.

DOJ dropped it because the Treasury panicked and got into a massive fight with
them. Treasury is responsible for AML laws and know full well how stupid they
are - they became very scared that actually enforcing the laws Congress had
passed to their full extent would trigger another financial crisis due to an
exodus of trained staff. What DOJ wanted to do quite literally is jail CEOs in
America for crimes committed by drug dealers in Mexico _regardless of whether
or not they knew anything about it_. If they had succeeded, just imagine the
impact that would have had on the finance industry. Under that standard, every
single banker in the world would be a criminal facing jail time. Many of them
would try to get out of banking as fast as possible, and banks couldn't easily
survive massive simultaneous exits of senior staff.

------
benmmurphy
I'm outraged that the US is able to control the Mexican operations of a UK
bank.

~~~
sz4kerto
... of a bank who is present in the US. That how it works - last time a big US
software company got a huge fine by the EU for monopolistic behavior. :)

~~~
randomdata
I'm not sure that is a very good comparison. That big US software company was
practicing monopolistic behaviour in the EU. If IE was only forced on Mexico-
based customers, do you think it would have ever even come to trial in the
first place (in the EU)?

------
andy_ppp
I was under the impression that being a director of a Ltd. company gave you
limited liability from your company going bankrupt (i.e. they can't take your
home if your company goes bankrupt) but that you were fully legally
responsible for the actions of the company.

The article is perfectly correct in it's arguments, the world sadly is not.

I think that government have realised that constantly being corrupt and just
telling people "Oh, don't be silly of course the system is good and fair! Our
hand in the cookie jar is just us making sure the cookies are still there for
you!" doesn't wash anymore.

So instead of fixing it they are cracking down on Internet freedom; certainly
here in the UK.

------
vasilipupkin
I think the issue is, in order to actually prosecute specific individuals
criminally, the government would have had to prove that they indeed intended
to launder money, as opposed to say make it easier for Mexican factories to
pay suppliers in the US. Criminal burden of proof is much higher than the one
required for a civil prosecution. The fact that the bank very openly subverted
the money laundering controls probably makes it HARDER to prosecute, not
easier since they probably also had legal language describing all the
legitimate reasons for doing so, etc.

------
TomGullen
If you have enough money you're OK, you can always buy your freedom.

------
heymatty
What's outrageous to me is the government has to pass laws to make sure the
banks police their customers. It's non-sense. You should have the right to
deposit money with no questions asked.

Law enforcement shouldn't have to rely on the banks to disclose anything to
them unless they come with a court order and ask specific questions.

The laws are put a strain on day-to-day business for everyone and it's tiring.

------
tsotha
We should get rid of money laundering laws and go back to busting people for
things like drug trafficking. I don't like laws that criminalize behavior
based purely on intent - wire you cousin $9000 on two separate days and the
government may decide you've committed a crime punishable by five years in
jail. Based on what it thinks you were thinking.

------
scrabble
I think this is really where the current issue with the extremely wealthy
lies.

I don't have an issue with anyone accumulating wealth, but I do take issue
with people who are able to use that wealth to circumvent the law and increase
their wealth through illegal means.

Maybe I should have become a banker instead of a software developer.

------
mkhalil
I can understand the fears of the Justice Department on this one. Any
financial instability gets us closer to a depression. Something this
government does not want. Any dip in our economy and the government
immediately starts bailing out banks and big business. Why? Well, last time
their was a depression, there was great change in the government. Every day
one could look forward to another episode in the battle between the President
and the Supreme Court. Prohibition was repealed, as was inhibition, and bank
holidays last all year. They have worked too hard and too long to get the
public under such great control as it is today, and we would do the depression
so much better than the 30's did. 'TALKIN' BOUT A REVOLUTION' my friends.

------
dmix
Instead of abandoning money laundering laws, why not double down on and focus
our surveillance-state telescopes at the Cayman Islands? or any other store of
money on foreign islands?

Monitor financial transactions and use their data-mining systems to associate
accounts to people in tax-paying countries hiding assets! Sounds good to me.
Then the FBI can spend less time foiling terrorism plots manufactured by the
FBI [1], that are force-fed to incompetent poor people. Instead, catching
serious criminals who are directly exploiting our financial system.

[1] [http://blog.independent.org/2013/12/14/fbi-successfully-
foil...](http://blog.independent.org/2013/12/14/fbi-successfully-foils-
another-fbi-plot/)

------
josefresco
Let me summarize...

1\. Doing illegal drugs: Not Ok, jail. 2\. Making illegal drugs: Not ok, jail.
3\. Selling illegal drugs: Not Ok, jail. 4\. Making tons of money off of
people who do sell illegal drugs: Partially Ok (just pay a small fine).

------
daphneokeefe
All the laws, all the money spent enforcing them, lives ruined, and we still
believe that the "war on drugs" can be won. There is a huge industry based on
production and trade in banned substances. Anyone who wants one of those
substances can find it easily, though at artificially high prices and
questionable quality, and often by taking some personal risk.

Maybe we should try another approach? This one clearly isn't working.

Of course, arrayed against alternative approaches is a massive law enforcement
enterprise with a lot to lose from ending this "war".

------
bradleyjg
This article seems to be from last year. The AUSA in question is now back at
white shoe law firm Covington & Burling, doing white collar criminal defense
work.

One hand washes the other.

------
salient
How can it be constitutional to extract your DNA, and then _make you pay for
it_? That doesn't make any sense to me. What's next? Making you pay for your
own jail time? If they want to make you do all of that, then they should pay
for it.

It reminds me of this recent story:

[http://www.policestateusa.com/2013/woman-probed-cavity-
searc...](http://www.policestateusa.com/2013/woman-probed-cavity-searched-x-
rayed-reenter-usa/)

~~~
andy_ppp
The US government is telling you to go fuck yourself - that'll be $9bn dollars
worth.

------
beloch
I certainly hope somebody is keeping an eye on Lanny Breuer's bank accounts;
All of them, including the hidden offshore ones. I smell a big fat bribe.

~~~
__alexs
Given that he's run off to collect a pay check in a new position created for
him at Covington & Burling LLP, a firm well known for representing various
major banks, I imagine they'll be getting plenty of work from HSBC in the
future.

------
at-fates-hands
This actually par for the course. Pretty much any time you start climbing the
ladder and going after businesses connected to governments, it gets pretty
dodgy.

If I remember correctly, the same thing happened when they busted Pablo
Escobar. They infiltrated his banking operations and once the investigators
found out there were high ranking officials both in Columbia and here taking
kick backs, they shut the investigation down.

------
volume
I wonder: While Tabibi says that's just several weeks worth to HSBC, then what
would have been an appropriate amount without threatening the financial
system?

I see the logic of how unfair it is for no jail time for anyone at HSBC.
Perhaps this is something that is highly unlikely or too steep a battle to
fight. Maybe then, at least the settlement could have been more than the
"record $1.92 billion settlement".

~~~
jaynos
Banks have proven time and time again that fines are not going to stop them
from doing illegal activity. If you throw a few execs in jail, well, people
will start to think more about their future actions. The current system of
bonuses for performance and minimal chance of a US investigation that leads to
a fine, at most, encourage illegal/shady behavior. Throw in the risk of jail
time and people will think twice before doing anything might be illegal. You'd
also get a lot more whistleblowers trying to cover their asses.

~~~
volume
Ya, I just am not familiar enough with the issue to know if 1.92 billion was
appropriate or not relative to the damage of any other wide scale settlement.

How about the $200 billion tobacco settlement as a baseline? Were HSBC's
damages 1% what was settled in the tobacco case in 1998? Disclaimer: I'm an
outsider to the legal profession, so pardon me if it's a silly comparison.

------
raverbashing
So

Who gets "the produce" from Mexico again?

How does this get distributed in the US? Is the bigger profit in production or
distribution?

In which country is an exporter payed usually? (this is not a hard question)

The bank is responsible, yes, but more responsible is who put the money in
there. And who provided the money in exchange for a product.

------
rxever
Why is this link being pushed down Hacker News front page if you compare it to
this link Perl6: Unary Sort. Both posted 9 hours ago. One with 486 points, the
other 55 points? Because the former did not receive many points in say last
hour?

------
chanux
Is this something that happen often?
[http://www.rollingstone.com/politics/news/gangster-
bankers-t...](http://www.rollingstone.com/politics/news/gangster-bankers-too-
big-to-jail-20130214)

------
csomar
Anyone here notice something? Big Banks launder money and get with it. While
Big Tech companies get to lose their right to privacy and seems powerless
against the NSA.

And big tech companies actually have a much bigger market cap.

~~~
fuqua
Here's the difference. The banks control something critical: the financial
system. What's the critical system for the tech companies? The Internet. Tech
companies don't control it, so they don't have as much leverage.

------
ivanca
That ironic moment when you realize that the American government is an ally of
the Mexican cartel (and by extension, its terrorism) when it suits them best.

------
RamiK
There is a simple and very fitting solution to this problem: mandatory minimum
sentences for white-collar crimes.

------
redwood
Money = inertia. Money = power. Money = too big to fail. Money > all.

------
wprl
The system is a fraud.

------
datums
the invisible stimulus package

------
stefantalpalaru
It actually proves that the rule of law is a joke.

------
ye
If I owned a newspaper, the front page would say "FEDS LEGALIZED MONEY
LAUNDERING".

