British bank HSBC will pay a record $1.9 billion to settle allegations it aided money laundering after reaching an agreement with US authorities, which allows it to escape criminal charges but raises questions over whether banks are "too big to prosecute" for facilitating criminal activity. 

The settlement follows July's US Senate report, which concluded that HSBC's lax controls enabled Mexican drug cartels to launder billions of dollars by moving money from the bank’s Mexican branches to the US.

According to the Senate report, the bank's weak enforcement of regulations enabled the movement of money to terrorist organizations and governments on sanctions lists.

The Congressional hearings into the case also exposed the weaknesses of US regulators. In 2010, the Office of the Comptroller of the Currency failed to act after finding that HSBC had not reviewed $60 trillion in transactions and 17,000 accounts flagged as suspicious.

The deal struck by HSBC to end the case includes a deferred prosecution agreement, which will see an independent auditor monitor the bank's progress over the next five years and leaves open the possibility of prosecution at a later date.

InSight Crime Analysis

Despite the deferred prosecution agreement, there is widespread belief among officials, analysts and in financial markets that this matter is now settled and prosecutions will not follow.

Citing anonymous officials close to the case, the New York Times reports that federal prosecutors spent months debating whether to issue criminal indictments for money laundering. Authorities eventually ruled it out as such charges could ultimately cost HSBC its charter to operate in the US, seriously undermining the country's fragile economic recovery.

Some prosecutors advocated for a compromise in which the bank would plead guilty to violations of the federal Bank Secrecy Act, but Treasury Department officials and bank regulators cautioned that this could also be detrimental to the economy, according to the Times.

Other investigations and independent research suggest the HSBC case represents just a fraction of the proceeds of organized crime that are laundered through major financial institutions. In not pursuing even the mildest criminal charges against the bank, US authorities are arguably sending banks the comforting message that economic considerations trump legal responsibilities in the fight against organized crime, at least when it comes to "white collar" financial crimes. 

Investigations

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
Prev Next

A Look Inside El Salvador's Prison Nightmare (Video)

A Look Inside El Salvador's Prison Nightmare (Video)

El Salvador's Cojutepeque jail is a perfect illustration of how prisons in this country have become the main breeding and training grounds for street gangs.

The Reality of the FARC Peace Talks in Havana

The Reality of the FARC Peace Talks in Havana

If we are to believe the Colombian government, the question is not if, but rather when, an end to 50 years of civil conflict will be reached. Yet the promise of President Juan Manuel Santos that peace can be achieved before the end of 2014 is simply...

MS-13's 'El Barney': A Trend or an Isolated Case?

MS-13's 'El Barney': A Trend or an Isolated Case?

In October 2012, the US Treasury Department designated the Mara Salvatrucha (MS-13) as a transnational criminal organization (TCO). While this assertion seems unfounded, there is one case that illustrates just why the US government is worried about the future.

Criminalization of FARC Elements Inevitable

Criminalization of FARC Elements Inevitable

While there is no doubt that the FARC have only a tenuous control over some of their more remote fronts, there is no evidence of any overt dissident faction within the movement at the moment.

El Salvador's Gang Truce: Positives and Negatives

El Salvador's Gang Truce: Positives and Negatives

The truce between El Salvador's two largest gangs -- the MS-13 and Barrio 18 -- opens up new possibilities in how to deal with the seemingly intractable issue of street gangs. But it also creates new dangers.

Barrio 18 Leader 'Viejo Lin' on El Salvador Gang Truce

Barrio 18 Leader 'Viejo Lin' on El Salvador Gang Truce

Barrio 18 leader Carlos Lechuga Mojica, alias "El Viejo Lin," is one of the most prominent spokesmen for El Salvador's gang truce. InSight Crime co-director Steven Dudley spoke with Mojica in Cojutepeque prison in October 2012 about how the maras view the controversial peace process, which has...

The FARC 2002-Present: Decapitation and Rebirth

The FARC 2002-Present: Decapitation and Rebirth

In August 2002, the guerrillas of the Revolutionary Armed Forces of Colombia (FARC) greeted Colombia's new president with a mortar attack that killed 14 people during his inauguration. The attack was intended as a warning to the fiercely anti-FARC newcomer. But it became the opening salvo of...

Ivan Rios Bloc: the FARC's Most Vulnerable Fighting Division

Ivan Rios Bloc: the FARC's Most Vulnerable Fighting Division

When considering the possibilities that the FARC may break apart, the Ivan Rios Bloc is a helpful case study because it is perhaps the weakest of the FARC's divisions in terms of command and control, and therefore runs the highest risk of fragmentation and criminalization.

The FARC 1964-2002: From Ragged Rebellion to Military Machine

The FARC 1964-2002: From Ragged Rebellion to Military Machine

On May 27, 1964 up to one thousand Colombian soldiers, backed by fighter planes and helicopters, launched an assault against less than fifty guerrillas in the tiny community of Marquetalia. The aim of the operation was to stamp out once and for all the communist threat in...

The FARC and the Drug Trade: Siamese Twins?

The FARC and the Drug Trade: Siamese Twins?

The FARC have always had a love-hate relationship with drugs. They love the money it brings, funds which have allowed them to survive and even threaten to topple the state at the end of the 1990s. They hate the corruption and stigma narcotics have also brought to...