Financial Transparency Coalition

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Reporter Chad Bouchard wrote an excellent piece covering Tuesday’s HSBC hearing in the Senate Permanent Subcommittee on Investigations.  Committee presented the results of its investigation of HSBC, the international banking giant, that included over a million pieces of evidence, mostly in the form of emails between executives, showing patterns of non-compliance to laws and regulations, as well inadequate implementations of anti-money laundering safeguards.  Bouchard breaks down the hearing, pointing out HSBC’s willingness to do business with rogue regimes, their failures to comply with good banking practices, as well as failures by U.S. regulators to put an end to known malfeasance.  He writes:

An executive at Europe’s largest bank announced his resignation during a U.S. Senate panel Tuesday following a blistering report on the bank’s failure to police money laundering in its accounts.

HSBC group compliance head David Bagley told the Senate Permanent Subcommittee on Investigations that the bank had “in some important areas failed to meet our expectations and the expectations of our regulators.”

Subcommittee members grilled bank executives and regulators over company emails and other documents that painted a picture of slack controls, deliberate deception, and unheeded red flags that allowed corrupt governments, terrorist organizations and drug kingpins to launder money in the U.S. Subcommittee Chairman Senator Carl Levin said the lack of oversight at HSBC made the U.S. financial system a “sinkhole of risk” for dirty money.

The 340-page report found the bank’s U.S. affiliate, known as HBUS, had a “history of weak anti-money laundering controls,” that was, given the overwhelming volume of transactions the bank handles, a “recipe for trouble.”

Bouchard also includes the voices of experts and watchdogs, illustrating their significance in the debate:

Dennis M. Lormel, former Chief of the FBI’s Terrorist Financing Operations Section of the Couterterrorism Division, said, “If HSBC actually implements what they say they’re going to do, that’s going to change this entire industry.” He predicted, however, that it would take decades to change banking culture.

Serious reforms would not stick without major advances in transparency, watchdog groups said.

Stephanie Ostfeld, policy advisor for London-based Global Witness, said the Treasury Department “should require all banks to identify the ultimate owner of all corporate accounts.”

…

Heather Lowe, legal counsel and director of government affairs at the Washington-based Global Financial Integrity, added that money laundering is not a victimless crime. “It stifles economic growth, it stifles education,” she said. “That’s very much lost in hearings like the one we had today, which focus on numbers and money-laundering laws, and people really lose that human connection.”

Read the rest of the report here for a more in-depth look into the hearing.

100 Reporters is a news organization dedicated holding businesses and governments accountable, promoting transparency non-corrupt practices.  The organization frequently quotes Global Financial Integrity, as well as lists them as one of their partners.

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