Outrageous HSBC Settlement Proves the Drug War is a Joke

Also showing your current bank account statements will help.

But we'd rather refuse to open this simple checking account just because (...we're busy laundering money :-)...).

And no one gives you the exact goddamn reason or a simple solution.

Its not like I turn up with with 50k in 500 euro bills and want to open an account that day.

(b) Regardless, an EU Directive is essentially an "EU law". It's a distinction without much of a difference.

(c) Some countries' constitutions say "All EU law/directives/whatever are binding and constitutional, unless the country leaves the EU". The Irish constitution has this sort of clause.

(d) EU law/directives/regulation is created by the EU. Which we vote on. European Parliament elections are coming up in 2014. If you think you have no say in the EU, vote in the EP elections and vote in your national elections. Those 2 directly elected bodies control EU law.

A lawyer most certainly does not have the duty to hide the crimes or confessions of his client(s). Not in the EU, not in the US (nor does a priest or doctor, but they can legally choose to do so in most jurisdictions. Anyone who is not a priest or doctor cannot make this choice : you have to report. In practice I've never seen anyone get sued for not reporting anything outside of financials).

Now as for the interpretation of this ... You have the US way (it's not illegal until a court says it is ... there's something to be said for that), and the EU way. The problem in the EU is that a lot of tax collection agencies are less than subtle and have legal rights that mean you simply don't want to even appear to cross them. In Western Europe, a tax agent has the right to shut down any business without specifying a reason, lock any account without specifying a reason, and take anything from any premise without a reason (or lock it down).

Does this violate the relevant constitutions ? Nobody's successfully challenged it as far as I know. (Yet another reason EU criticism of NSA data collection is ridiculously hypocritical).

That doesn't change the basic principle though. If you go to a lawyer saying "I killed this guy, get me out of it", he may go to the police and report you. While the lawyer is unlikely to get sued for not warning the police, when asked a lawyer MUST testify that this has indeed happened (same thing applies to anyone else for that matter).

Attorney-client-privilege is an English/American legal term with a lot of meanings to it shaped by the courts.

In the EU, different member states have rules regarding confidentiality between lawyers and clients. Usually, the right to confidentiality is not absolute (the lawyer may have an obligation to speak in certain situations).

For a while lawyers hoped that something like attorney-client-privilege could be interpreted into the European Convention for the Protection of Human Rights and Fundamental Freedoms. With the ruling above this seems less likely.

Why not? You PAY him based on what that guy several layers down does...

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.

I don't receive any cash payments and I don't make any cash payments in my business. I am not a financial institution. This year, the value of the transactions that I participated in was probably around 100 million euro or so, and a fraction of a percent of this went through my account or ended up on my account, and all of it came from and went to banks. Not a cent was received in cash. Not a cent was paid out in cash. Now, HSBC and other banks probably have billions flowing through their system every second and in the order of millions received in cash or paid out in cash every second. I think it's natural to burden a few thousand banks with these rules, and not millions of small businesses.

First , they are responsible as managers like others said.

But we're talking about serious allegations of supporting terrorism. For a common citizen , any strong link to terrorism means some extra legal horrible torture . But for HSBC's managers , even repeated offenses and warnings mean nothing.

I'm not convinced that it wasn't completely obvious. The Mexico unit shipped $7 Billion to the US unit. Why did Breuer call it "stunning failures of oversight"?

> You don't send an executive to jail because a guy several layers down did something wrong

So why are the bonuses of those execs being cut if they are not to blame? Again, why did Breuer call it "stunning failures of oversight"?

I'm also not convinced they won't use this as a horrible excuse to unnecessarily increase monitoring, while the entire thing was plainly visible under an existing system. I would like cash to stay private, can i really not have that without something like this being invisible?

http://money.cnn.com/2012/12/10/news/companies/hsbc-money-la...

1. Just to be clear, they didn't put the anti money laundering people who were literally in charge of verifying compliance with these laws in jail either, even though they knew they were laundering money for the drug cartels. The government alleged, and HSBC never denied, that they had actual knowledge of what the money was being used for. It's not a case of "oh, well, i had no idea bob at the teller window was doing this".

This isn't "the guys several layers down did something wrong"

This is "We knew were laundering money for the drug cartels. We intentionally flouted the law (government's words) to keep it that way."

2. It's not "wrong", it's criminal. What HSBC did is criminal. They were charged criminally. This is a deferred prosecution agreement. They knew they were laundering money for drug cartels. "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." This isn't even close to right. You should try reading the charging documents that led to this settlement. The prosecutors make very clear what they are guilty of, and lay out a case that makes clear the executives knew exactly what was going on. They even created fake banking products to get around the law, too.

There are a lot of people who benefit from the war on drugs, who also share responsibility for perpetuating it.

Wal-Mart is TBTF, the question is whether there's anything the government could do that would cause it to catastrophically fail (and thus whether or not there's a moral hazard involved). In the case of Anderson, the government indictment killed the firm because no one wanted to be audited by a firm indicted for fraud. In the case of banks, there are automatic sanctions that go into place upon a criminal conviction that would constrict the ability of the bank to access capital markets, and thus could conceivably lead to rapid collapse. It's hard to see anything similar that could be done to Wal-Mart. If convicted of a crime most likely it would just pay whatever the fine was and keep doing business.

On the other hand, take a business like Boeing -- that's both TBTF, largely because of it's giant workforce, and vulnerable to rapid collapse if government sanctions, such as those stemming from criminal conviction, made it ineligible for US government contracts (such contracts make up around 40% of revenue).

As for the grandparent's proposal rather than a hard cap, I'd prefer to see some sort of feedback mechanism to counteract natural economy of scale effects. Perhaps some sort of escalating tax rate (per employee maybe or some combination of employee and revenue). For industries like banking with acute dangers something more tailored might be in order -- taking into account balance sheet size, nominal outstanding transactions, and counterparty centrality.

And Siemens was able to use their ever-expanding reach to be able to let the US government slip malicious code into unknown numbers of scientific equipment to jump the airgap into Iranian nuclear facilities. But that's just the stories we know.

My state, Virginia, recently passed a law that software contractors will need to be licensed in Software Engineering by the IEEE. The license test is only offered twice a year, costs several hundred dollars, and covers no topics on programming. And, if you're a corporation of a particular minimum size (that is particularly large), you're exempt from the requirement because supposedly such a large company would already be interested in protecting themselves from liability, so would conceivably be vetting their programmers. Except we know they don't, because there is no way to vet programmers like that, if the IEEE test is being held up as the standard.

Any company over a certain size (certainly way less than 20,000) institutes internal procedures for smaller groups within the company to coordinate. How would we not all be better off if those smaller groups were independent competing actors?

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?

yeah that's ridiculous, but that's the US legal system for you and nothing to do with the banks.

I can't see that anywhere in the link.

Yes, exactly, they are being penalised for weak controls as I said, not for wilful complicity in money laundering

> for knowingly and willfully facilitating prohibited transactions with Iran, Libya, Sudan, and Burma.... for moving money for Cuba

well that's got nothing to do with mexican drug money laundering, and whilst that may well have been in contravnention of US law at a moral or ethical level there's nothing (superficially) wrong here; plenty of reasons for legitimate business with these states which a UK company should be able to conduct if it chooses.

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

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.

The gradual erosion of prohibition through popular referenda in the states argues against the truth of this claim.

You don't launder money to buy more illegal things, you launder money to buy things legally.

Edit - the easiest way to launder money is actually to run a legit business (like a restaurant), and create fake transactions that are settled in cash. And of course, business men will take that cash to the bank. Now how is the bank going to determine if that cash coming in is from a real business, a fake one, if it's drug money, etc...? Because plenty of real businesses, especially in places like Mexico, do most of their business in cash...

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.

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.