Hsbc Funds Laundering Article

The HSBC Money-Laundering Scandal

Case Facts

HSBC is one of the largest financial institutions in the world, with resources over $2. 5 trillion, 89 , 000, 000 customers, 230, 000 investors, operations/affiliates in 85 countries, and 2011 profits of nearly $22 billion (HSBC, 2011a). Sketching upon facts revealed carrying out a year-long analysis into HSBC (Levin ainsi que al., 2012), seven aspects of case reality illustrating important anti-money laundering (AML) and terrorist funding problems can be seen including:

Historical Severe AML Deficiencies: HSBC operated the correspondent makes up about foreign banking institutions with historical, severe AML deficiencies, which include dysfunctional AML monitoring devices for bank account and cable transfer activity despite the risks associated with large cash orders, an unwanted backlog of 17, 000 unreviewed signals, insufficient and unqualified staffing, insufficient AML resources, AML leadership challenges, inappropriate country and customer risk assessments, ineffective options for identifying dubious activity, and late or absent confirming of dubious activity to relevant legal or regulating bodies (Levin et ing., 2012). Taking on High Risk Affiliate marketers: HSBC did not assess the cash laundering risks associated with HSBC affiliates before opening American correspondent makes up about them, failed to identify danger affiliates because of a failure to conduct research checks, and failed to take care of HSBC's Philippine bank like a high risk inspite of known legal problems in Mexico (Levin et al., 2012) leading to money-laundering activities. Circumventing Legal Prohibitions: American laws stop banks via engaging in economic dealings with high risk persons and countries. However , HSBC frequently circumvented the rules designed to prevent dealings with high-risk countries which will ultimately facilitated transactions for terrorists and criminals. Despite evidence that affiliates were acting to circumvent legal filters, HSBC failed to take decisive actions to end this kind of deceptive practice (BBC Media, 2012c; 2012d). Disregarding Terrorist Links: HSBC provided American correspondent accounts to some foreign banks in spite of evidence of links to terrorism including Saudi Arabia's Ing Rajhi Traditional bank which has been linked to financing terrorism (Levin ou al., 2012). Clearing Dubious Bulk Tourists Cheques: HSBC cleared a lot of American dollar travellers' inspections without proper anti-money laundering controls despite proof of suspicious activity (BBC Information, 2012a). Giving Bearer Discuss Accounts: HSBC opened risky bearer reveal corporate accounts with limited AML controls (Levin ain al., 2012). Allowing AML Problems to Fester: HSBC's money monitoring failings day to the year 2003, when government bodies ordered that to better monitor suspicious funds flows. In addition , in 2010, government bodies ordered that to review shady transactions and improve their " ineffective” conformity program (Viswanatha & Wolf, 2012).

Ethical Problems

It is obvious that the HSBC executives had been the joint decision-makers as they were the ones who ‘turned a blind eye' despite external and internal warnings of HSBC's not enough monitoring devices (Burghardt, 2012; Mollenkamp & Wolf, 2013). Even with knowledge of unethical and risky negotiations and with respect to the financial position of HSBC which in turn would have allowed it to interject staffing and facilities resources to improving the anti-money laundering systems, executives were in charge of allowing ineffective and outlawed anti-money washing systems to get continued rather than improving these kinds of controls. HSBC executives are accountable for the HSBC table and investors and have a duty to act in their best interests in order to maximise profit. However , management also have a responsibility to workers and buyers to uphold corporate cultural responsibilities (e. g., preserve effective AML and anti-terrorism programs), and keep bank basic safety, soundness, honesty, and...

Recommendations: BBC Reports, 2012c, ‘HSBC used by 'drug kingpins', says US Senate', 17 September 2012, seen 18 May 2013,.

BBC News, 2012d, ‘Senate record: HSBC 'allowed drug money laundering', 18 July 2012, viewed 18 May 2013, < http://www.bbc.co.uk/news/business-18866018>.

Blum, JA, 2012, ‘Money laundering and legal ethics', viewed 18 May 2013,.

Burghardt, T, 2012, ‘HSBC and the global drug trade', viewed 18 May 2012,.

Dominion Content, 2012, ‘World banks ' greed continue to trumps ethics', viewed 18 May 2013,.

Eckert, E, 2012, ‘HSBC accused involving laundering', seen 11 May possibly 2013,.

Financial Action Task Force (FATF), 2012, ‘How does cash laundering have an effect on business? ' viewed 18 May 2013,.

HSBC Loge, 2011a, ‘HSBC Holdings Gross annual Report and Accounts: Results Highlights' two December 2012, viewed 20 May 2013,.

HSBC Loge, 2011b, ‘Human Resources Types of procedures Manual', viewed 18 Might 2013,.

Simeón, JV, 2010, ‘The ethical stance in banking', PhD Dissertation, looked at 21 May 2013'.



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