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Senate Report Blasts Bank For Laundering Cash From Drug Cartels And Organizations With Terrorist Ties

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"Senate Report Blasts Bank For Laundering Cash From Drug Cartels And Organizations With Terrorist Ties"

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Global bank HSBC enabled money laundering from Mexican drug cartels, funneled money to Iranian organizations despite government sanctions against the country, and was used by Saudi Arabian banks with ties to terrorist organizations, according to a Senate committee report released Monday. The bank’s executives and its regulators at the Office of the Comptroller of the Currency “ignored warning signs and failed to stop the illegal behavior at many points between 2001 and 2010,” the New York Times reported.

HSBC, Europe’s largest financial institution, ignored inside warnings about its transactions with Iran and other sanctioned countries, and the OCC ignored the behavior even after it was uncovered:

When the bank developed a way to process transactions for Iran’s largest retail bank, an HSBC executive wrote an e-mail to his colleagues that said, “I wish to be on the record as not comfortable with this piece of business.” None of his colleagues responded and the deal went ahead, according to the report.

The subcommittee also found evidence of widespread wrongdoing in HSBC’s failure to stop money laundering through accounts tied to drug trafficking in Mexico. The bank is accused of shipping $7 billion in cash from Mexico to the United States in 2007 and 2008 despite several warnings that the money was coming from cartels that needed a way to return their profits to the United States.

In many of the cases detailed in the report, the Office of the Comptroller of the Currency is said to have spotted the problematic behavior. But in nearly every case, the subcommittee found that the agency gave HSBC only a warning or mild punishment and did not push the bank to make large-scale changes.

The report’s author, Michigan Sen. Carl Levin (D), is skeptical of the bank’s expected apology at a Senate Permanent Subcommittee on Investigations hearing today. “While the bank is saying all the right things, and that is fine, it has said all the right things before,” Levin said. Both HSBC’s new chief executive and OCC head Thomas Curry, who joined the agency in April, are said to be promoting stricter enforcement atmospheres at their institutions.

The HSBC report is the latest in a recent run of scandals at the world’s largest financial institutions. The LIBOR rate-rigging scandal at Barclays has led to scrutiny, and potential lawsuits, from both American and British lawmakers, and JP Morgan Chase recently disclosed that its employees attempted to cover up trades that went wrong in the “London Wale” deal that has cost the bank billions of dollars.

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