HSBC Pays Record Fine for Laundering Drug Money

HSBC Pays Record Fine for Laundering Drug Money

By McCarton Ackerman 12/12/12

But some accuse the bank, which admits laundering millions for Mexican cartels, of buying its way out of jail.

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HSBC laundered "staggering amounts of
cash."
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Despite HSBC's admission of laundering over $800 million for Mexican drug cartels and covering up many more illegal transactions, the US Department of Justice has ruled that no criminal charges will be filed against the London-based bank. A DOJ report labels HSBC as "the preferred financial institution of drug cartels and money launderers" due to its "willful failure" to report suspicious activity and uphold banking protocols. HSBC will pay $1.9 billion to the US government, the largest such fine in history. "The investigation revealed that staggering amounts of cash, hundreds of thousands of US dollars daily, were being deposited into HSBC Mexico using boxes specially made to fit through tellers' windows to speed the transactions," says US attorney Loretta Lynch. Last July, HSBC admitted allowing drug cartels to launder billions of dollars from 2002-2009, and to cutting its total number of internal watchdogs to save money. The bank dodged criminal charges because federal officials never found individuals or branches knowingly acting together; HSBC is instead painted as a disorganized whole, collecting fees without knowing, or wanting to know, their origins. While some are accusing HSBC of buying its way out of jail, Lynch insists that's far from the case. "That's a very short-sighted view, I think, because in this case they're obviously paying a great deal of money, but they also have to literally had to turn their company inside out," she says. "And the message should be that that's what you have to do." HSBC states that it has fired executives and rescinded bonuses in response to the scandal. The bank must demonstrate its compliance with all laws to a federal monitor over the next five years.