FinCEN Files: HSBC moved Ponzi scheme millions despite warning | Hacker News Reader

FinCEN Files: HSBC moved Ponzi scheme millions despite warning

bbc.com

111 pointsapta26 comments

Earlier discussions:

https://news.ycombinator.com/item?id=24535241 (473 points/199 comments)

https://news.ycombinator.com/item?id=24535903 (129 points/16 comments)

It seems a lot of comments are pointing to HSBC while the bigger whale JP Morgan which moved $1bn is not mentioned in comments. HSBC is involved with $80 million fraud compared to JP Morgan which is involved over $1 billion fraud. Take Goldman Sachs paying billions in fine to Malayaisan government and still many investors in 1MDB still lost.

So probably people can take solace that person who defrauded $80 million is arrested and punished in China. But the person in JP Morgan and Goldman Sachs still at large and both the banks are doing very fine without fines by USA government.

Too big to fail (tm)

Having read through the BBC report, it would appear HSBC became a victim of its own size. The report makes an odd statement though:

"But the reports failed to include key facts about customers, including the ultimate beneficial owners of accounts and where the money came from."

But in US beneficial owner's info was not required until recently ( https://www.fincen.gov/resources/statutes-and-regulations/cd... ; https://www.53.com/content/fifth-third/en/business-banking/m... ).

Granted, SARs get a little special since banks ( even internally ) are very tight-lipped about what SAR processing for legal reasons. So depending on the team, accounts may be investigated further as the situation warrants, but it was not a requirement of any kind as the article seems to suggest ( though it is phrased carefully enough to avoid saying that ).

Having said all that, I don't know if it is true at all banks, but you would not believe the wrangling needed to close an account. The times I saw it happened, it tended to be a clear case of fraud against the bank in individual cases, and some major issue with business accounts ( commonly now referred to as 'derisking' ). Normally, account officers, various VPs will fight tooth and nail to keep their favorite customer in ( and they should, but I want the reader to understand the issue is not as simple as BBC made it seem ).

HSBC was busted in the early 2010s for enabling people to launder money. They were more recently fined by the US government for advising individuals on how to evade taxes. They have a history of questionable practices.

A history that dates back to its very origins, AFAIK they were first created to manage the piles of money generated from the opium sold by British into China

Allow me to adjust my shock levels that the bank of choice among Mexican drug cartels is caught enabling more fraud with Ponzi schemes.

I do wonder the true scale of the ineptitude and corrupt nature of their fraud department is.

The secret is that Compliance Officers are at-will employees too.

https://www.workforcebulletin.com/2012/05/22/new-yorks-at-wi...

What are the ramifications of this? That they can be fired by saying the company is doing bad?

Yes

Yes, but compliance officers can be conveniently held responsible. Why would you fire a potential scapegoat? Naturally, compliance officer's are by nature risk averse and apply CYA approach liberally.

They don’t scapegoat the compliance officer.... there is more of an art to avoiding liability than that.

The mere presence of a compliance officer checks the box.

A compliance officer sounding an actual alarm can get them fired.

Right on spot...let’s not “miss the woods while looking at the tree”

whenever there's a leak regarding banking institutions these bank names keep coming up. its been happening for years. is anything actually done about it? do they get fined?

Fines are part of their business expenses

> is anything actually done about it?

No, because they're "too big to fail". And in the rare case that the hammer is actually brought down, it usually falls on a patsy "rogue employee", despite a corporate culture and wilful blindness that enables this behaviour.

If they're too big to jail, why not split them into smaller banks using antitrust laws?

Because they are not too big to fail, hence the scare quotes. They’re just too politically connected to go down.

they get fined for all the kickbacks they give

With the nation doing the fine thinking the corporation views them any differently from the last strongman

Didn’t HSBC originate in the opium trade?

They were reports of them being the official banker for Al Qaeda. HSBC is a mob bank.

good advertising, everyone needs a bank that dgaf.

not because you want to do anything illegal, but because you don't want a bank afraid all your benign transactions are illegal and causes inconveniences to you

For these type of things, I think Singapore style caning would be very helpful. Basically, whenever there are violations like this, the CEO, the C-Suite, and all the board members get caned. Doesn't matter if it was some low-level employee that actually did it. They still get caned.

This nicely fixes the problem of too-big-to-fail since there are not bankruptcy level fines. It also aligns incentives since their ass is literally on the line.

well, even without caning you could jail people almost everywhere without causing a bankruptcy.

The problem seems to be that C-Suites are just not held responsible.

I don't know if they always should, as the argument is complex, but it seems the current state of affairs is just not good.

I think HSBC is not worried about the quantum of punishment :(

I have seen this coming!

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