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kbenson

The investigation took years and not a single HSBC employee has done a perp walk.

The large companies obviously know how to avoid accountability by eliminating, or never creating paper trails.

Oh, and since when does selling BTC anywhere, including Silk Road, constitute a crime?

The article says money laundering, so there's probably more to it than that. Eterm's review seems to support that.

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No; the opposite. The large companies COMPLY with all the paperwork registration and reporting requirements, at least in the general case. Then when some SPECIFIC case comes up where the paperwork has not, perhaps, been filed correctly or accurately, they claim it is a rare exception from the general rule that they comply with all paperwork and reporting requirements, they'll rectify it right away, and so on.

The typical bitcoin "fuck the Man he can't catch me!" attitude is the precise opposite of the attitude that HSBC et al. have adopted, which is one of ingratiating compliance.

Yes. Some of the most damning evidence in the HSBC investigation was internal documents by the people whose only job was making sure HSBC complied with AML laws -- departments full of them! -- were saying things like, paraphrased from memory, "Why are we accepting this business? We have seen this movie before. It will end badly." or "You [people at one branch of HSBC] need to immediately stop [a particular banking practice] because it is certainly out of compliance with HSBC global policies and relevant AML laws in [our branch's] jurisdiction. You need to fix this, immediately."

And then it didn't get fixed, which is why they had to pay two billion dollars.

Edit: The movie quote part of a longer email excerpted extensively in the Congressional report. It's so amazing that I think I'll just copy/paste the whole excerpt.

A number of items jump out from your most recently weekly report (02JUL-06JUL) but everything pales in comparison with the ML items on page 4.

It looks like the business is still retaining unacceptable risks and the AML committee is going along after some initial hemming and hawing. I am quite concerned that the committee is not functioning properly. Alarmed, even. I am close to picking up the phone to your CEO.

[Redacted by HSBC] looks like another [Unimed306] type of situation – what on earth is an ‘assumption responsibility letter’ and how would it protect the bank if the client is a money launderer?

Please note that you can dress up the USD10 million to be paid … to the US authorities as an ‘economic penalty’ if you wish but a fine is a fine is a fine, and a hefty one at that. What is this, the School of Low Expectations Banking? (“We didn’t go to jail! We merely signed a settlement with the Feds for $ 10 million!”) …

So, [Unimed307] is strike one. [Redacted by HSBC] is strike two. Let’s now look at strike three. (I hope you like baseball.)

The same person who is giving the sancrosanct ‘assumption responsibility letter’ for [Redacted by HSBC] … is being asked by the CEO to explain why he retained the [Casa De Cambio Puebla308] relationship after USC11 million was seized by the authority in [Puebla309] account with Wachovia in Miami. What?! The business was okay with this?

The AML Committee just can’t keep rubber-stamping unacceptable risks merely because someone on the business side writes a nice letter. It needs to take a firmer stand. It needs some cojones. We have seen this movie before, and it ends badly.”

7/17/2007 email from HSBC John Root to HBMX Ramon Garcia, with copies to Susan Wright, David Bagley, and Warren Leaming, “Weekly Compliance Report 02JUL-06JUL07,” HSBC OCC 8875925-927.

But what I don't quite understand is why there aren't 'perp walks'. It seems odd, because I imagine lots of FBI agents would love to take down guys at a big bank.

I'm not saying this to point out a huge injustice, it's just very curious.

You need attorney generals, which generally run on shoestring budgets, to be willing to criminally prosecute millionaires and billionaires who are likely going to drag court out forever and most likely walk anyways. It's much easier to pop a couple of low level guys for possession to make your numbers look better.

Wow. Why are you just randomly making up your own pet theory when the question was actually answered and also had a catchy phrase to go with it? HSBC was "too big to jail"

http://www.cnn.com/2014/01/06/opinion/calabria-gilbert-too-b...

Holder responded by saying he was not talking about HSBC in particular but that, "I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy."

From Holder's statements, it appears that the government was so worried about the dangerous repercussions that could result from prosecuting such a large, complex and globally significant institution that it shielded HSBC from criminal liability.

That's what he says publicly. The real reason is that he knows prosecuting HSBC's leaders -- a group of very well-connected billionaires -- would end his political career and greatly reduce the amount of future campaign donations financial institutions make to Democratic candidates.

> The real reason is

Oh, so you can speak for the real thoughts on Eric Holder's mind? Really? At the very least you should clarify that you're speculating wildly.

The American Dream is dead.

I appreciate the irony of saying such a thing here, a message-board set up around the idea that a person with only an idea can change the world.

If by "change the world" you mean "raise lots of VC money for selling a small piece of software to people's smartphones or hosting an ad-supported web application on a bank of servers", then yes.

> ..or hosting an ad-supported web application on a bank of servers"...

"On a bank of servers"? Surely you meant to say "in the Cloud"?

What is this, 1999? ;-)

It's because the big guys wouldn't be the ones to go to jail. They are smart enough to set up the incentives for low and mid level employees to commit crimes while never actually instructing them to do so. The relevant criminal statutes and doctrines require the government to prove beyond a reasonable doubt the mens rea of "intentionally" and given how things are done that's all but impossible in these cases.

The government could prosecute the low and mid level employees who were the "hitmen". I personally think they should, but there's a bipartisan consensus not to. Some because it would be an indirect attack on the banks (job creators) and others because they see the low and mid level guys as victims rather than co-conspirators.

> ingratiating compliance.

pretending to comply, a facade of compliance, Potemkin compliance? Somewhere within HSBC, Wachovia, etc. are decision makers with actual authority, who are responsible for ignoring the advice of the respective compliance departments.

The large companies obviously know how to avoid accountability by eliminating, or never creating paper trails.

Unfortunately it doesn't seem that it was a lack of a paper trail that kept the principals of HSBC out of orange pajamas. But rather an apparent perception on the part of the government that they were essentially beholden to HSBC for the sake of, well, it's hard to say precisely (but you can chose whether you want to take the AG's concern about "jobs" at face value or not):

  In December 2012, Assistant U.S. Attorney General Lanny
  Breuer suggested that the U.S. government might resist
  criminal prosecution of HSBC which could lead to the loss
  of the bank's U.S. charter. He stated, "Our goal here
  is not to bring HSBC down, it's not to cause a systemic
  effect on the economy, it's not for people to lose
  thousands of jobs."

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

Wrong, there were plenty of paper trails in the HSBC case.

The large companies know how to avoid accountability by paying off powerful politicians.

While no doubt true in some cased, I prefer the more optimistic view that the system is just somewhat broken with respect to bringing larger entities to account for their errors. I find that problem to be more tractable than eliminating political corruption, while possibly also making paying off politicians to avoid prosecution more dangerous for both involved parties.

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