The Continuing Sorry Story of HSBC!

The Continuing Sorry Story of HSBC. What Next?

The unfortunate story continues!

Allegations have surfaced from various sources that HSBC is likely to be hit again by a number of legal claims for alleged fraudulent activity. This seems like “Deja-vu!” Eight years ago the bank was subject to an investigation under US Law, and fines amounting to nearly US$2bn for providing “banking services” to drug cartels, and other unethical entities and characters, were imposed on the institution.

However, with these new allegations, there is the possibility of a moderating element here whereby such allegations are based on what are known as “SARs.” These are “Suspicious Activity Reports” which must be filed with the relevant legal authorities, if the bank believes supposed criminal activity has occurred inadvertently within its business domain.

From my professional experience, many SARs prove to be false. As such, it may be that HSBC simply needs to strengthen its AML (Anti-Money Laundering) procedures. But if that is indeed the case, the question needs to be asked: what exactly has the bank been doing to address this issue since the initial corrupt activity was spotted in the years 1997 to 2017? Clearly, not very much it would appear!

As usual HSBC is in has good company! Barclays and Standard Chartered Bank were amongst a number of additional global financial institutions that had previously been reported as handling a possible £1.5trn (US$2trn) corrupt transactions during the same period, which passed through the US financial system. These figures are truly mind-boggling; and in spite of the banking crisis in 2007 and onwards, certain elements of the system still appear to be poisoned by illegal and unethical business behaviour.

I find this astonishing as such alleged activity and sums in my view can only be supposedly authorised by “someone at the top” or certainly senior within any organisation. There is always some such individual of individuals in an organisation that have the apparent “power and authority” to do just this. Admittedly, it all sounds rather like a “Hollywood/mafia-type conspiracy theory” (see Mel Gibson in the film “Payback”) but the figures and the documents behind these allegations do not lie.

My first question is this: who will pay the price, accept responsibility, take the “fall” and when, for this illegal activity? Is this a case of “white collar” crime not considered a crime? At a time when over the last few years banks’ reputation has been at an all-time low, one would have thought that those in-charge would be re-setting standards, upping ethical behaviour, and enhancing business practices. This aforementioned remediation is similar to “justice”; it needs “to be done and seen to be done.” Banks are the life blood and “transactional oxygen” of the economy. By now, one would have hoped for better.

My second question is: Perhaps I am imagining it, but all this alleged corrupt activity seems to occur across the US financial infrastructure; or it is certainly reported that way, given the hefty fines lodged in USD by the US Department of Justice. What about London, Frankfurt, and Singapore for example? In short; any legal jurisdiction that is governed and regulated as an acceptable sound financial centre, where such institutions are active, must be included. On the other hand; are we to understand that this rotten behaviour just occurs in the US?  Surely not? Alternatively, perhaps the US Department of Justice has a global remit in such cases! I don’t know; perhaps someone can clarify this particular point for me and the readers of this post.

In the meantime, irrespective of the latter’s remit, I fear the answer to both question is: “Don’t hold your breath!”

Eliot Charles Heilpern
Membership Director
The Payments Business

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