Hacker News new | past | comments | ask | show | jobs | submit login

This is a popular misconception, but the article is right and the popular misconception is wrong. HSBC was fined for insufficient oversight of risky transactions. They did not "knowingly" launder money in the sense no executives were knowingly and provably involved in laundering money.



No. That's at best incorrect and at worse a lie. They knowingly laundered money in the sense that the only way they could not know they where laundering money was to hold their hands over their eyes. Even a trivial google query brings up articles like this [1]

   The committee is concerned that HSBC cleared large amounts of travellers' 
   checks over a number of years, without proper anti-money laundering 
   controls, despite evidence of suspicious activity.
   
   Between 2005 and 2008, HBUS cleared $290m worth of US dollar travellers' 
   cheques which were being presented at a Japanese bank.
   
   The daily transactions were worth up to half a million dollars, with large 
   blocks of sequentially numbered cheques being handed over.
   
   After prompting from US regulators, HBUS found out that the travellers' 
   cheques were being bought in Russia - a country at high-risk of money 
   laundering.
so they where moving hundreds of thousands of dollars daily from Russia to Japan to the US. I get the problem with international wire fees for small amounts of money, but if you're moving tens of thousands or hundreds of thousands, the $60 fee should be no obstacle. You can't characterize HSBC's actions in this, and in many other situations that a google query will find for you, as anything but willful ignorance.

[1] http://www.bbc.com/news/business-18880269


I assure you your downvote and your knee-jerk sanctimony doesn't go unappreciated, but what you described is exactly what I said was happening, not what you say is happening.

We're not talking about a fine for executives laundering money, we're talking about fines about 'a lack of proper anti-money laundering controls, despite evidence of suspicious activity'. This is weasel-speak for 'we found something suspicious but can't prove anyone important was involved.'

The decision-makers who would have seen this 'evidence' would probably be layers removed from HSBC top management. That executives are being blamed for this in the court of public opinion is part of the reason why companies are turning to massive Orwellian computer systems to monitor all financial activity.


Yep. If you dig into that story (big news at community banks in Japan), the "bombshell" is that Russians like paying Japanese used car dealers for cars, and that Japanese used car dealers are happy to oblige them, especially with regards to cars that are uneconomic to continue driving in Japan [+]. The US leaned on HSBC which followed up with a local Japanese bank. The local Japanese bank was disinclined to pry into its customers businesses all that much on behalf of a foreign regulator, relaying to HSBC a sentiment which probably wasn't literally "They're customers of long standing and are, legitimately, car dealers. Please give our regards to the Americans and tell them that the Occupation is over." but likely came close. The US told HSBC this was unacceptable and HSBC followed up with its customers (the Japanese regional banks), who said "Which part did you not understand the first time?"

[+] There exists a tax on automobiles which increases with age and which, fairly quickly, causes the tax to cost more than the residual value of the automobile. It is justified as a public safety measure, since you get an inspection when paying the tax, but is actually a straight-out subsidy to domestic car manufacturers, since it essentially mandates "Despite the fact that your products work for decades, customers are required to buy a new model every 6 years."

[Edit: I should add that while Hokuriku doesn't give one the impression of being impressively well-organized from the notes in the Senate investigation that my tiny bank in central Japan believes in KYC so much that their manager-at-the-time both successfully intuited "Patrick is seeing someone." and "Patrick has broken up with his girlfriend." from changes in my cash withdraw patterns and wrote these observations down in their log just in case the next manager needed them. I have many fun anecdotes from working with them, like the time my gym botched a withdraw request and received a blisteringly polite note in Japanese saying that no one with the specified name had an account at the bank and if, hypothetically speaking, the gym had business with one of the bank's customers then it should, hypothetically speaking, extend him the common courtesy of spelling his name right.]


The gym misspelled your name and your bank told them off? I'd love for some amount of the infamous Japanese formality to become more commonplace here...


"For example, HBUS carried out 28,000 undisclosed sensitive transactions between 2001 and 2007, an internal audit commissioned by the bank found. The vast majority of those transactions - worth $19.7bn - involved Iran."

Seems like they got fined for being super shady.


So the Chair of the Senate Investigation committee was a liar? "HSBC’s chief compliance officer and other senior executives in London knew what was going on but allowed the deceptive conduct to continue".


Things that congresscritters say are not held to the highest standard of proof, but it might behoove you to look up what 'deceptive conduct' means in the context of this quote.

Actually, I'll save you the effort that you didn't bother to spend yourself, and tell you what it means, to the best of my understanding.

HSBC affiliates (not HSBC itself) in some countries were processing certain transactions that were exempt from a certain regulatory requirement concerning transferring money to people designated to be terroists. HSBC built a computer system to enforce this regulatory requirement. The affiliates omitted information in internal reports to avoid triggering the computer filter for these transactions, and HSBC was like "can you include this information?" and the affiliates were like "no, these transactions are exempt". This is what the quote refers to.

So this quote is blaming HSBC for not demanding other banks file transactions internally in a way they weren't required to so as to not automatically trigger a computer system they weren't required to automatically trigger. It is this practice that Congress is calling 'deceptive'. The committee doesn't identify to what extent this is a crime, probably because none of the transactions were identified by the committee as violating the regulation that nobody--not HSBC, not Congress--was requiring them to follow.


To boil it down more simply, the USA had sanctions on Iran long before other parts of the world did. Thus someone wishing to send money from the UK to Iran, for example, could do so through HSBC in London. Those transactions might well end up interfacing with US controlled infrastructure in some way and the US parts of HSBC were then routinely interfering with those payments, because America doesn't believe in sovereign independence. So now these local HSBC affiliates or divisions have a problem: their customers want to make perfectly legal transactions (legal in those areas) and the American computer systems are getting in the way. Simple solution: don't use any keywords that the USA doesn't like.

Years later this practice would be described as "money laundering" and "sanctions evasion". However it was in reality just a reasonable way to tackle an unreasonable problem.


HSBC was about Mexican drug money largely. "“These traffickers didn’t have to try very hard,” Breuer said at a press conference in Brooklyn. “They would sometimes deposit hundreds of thousands of dollars in cash in a single day into a single account using boxes designed to fit the precise dimension of the tellers’ windows in HSBC’s Mexico branches.”[1]

[1] http://www.bloomberg.com/news/2012-12-12/hsbc-mexican-branch...


From my reading it looked like the computer system was an internal HSBC one, mandated by regulations. Correct me if I'm wrong.


"So [politician] was a liar?"

Yes.


Whereas the bankers on the other side of the issue are known for their honesty and integrity...


I'm pretty sure they knew they were making money dealing with sketchy people and were happy to look the other way while they were making money.




Guidelines | FAQ | Support | API | Security | Lists | Bookmarklet | Legal | Apply to YC | Contact

Search: