HSBC Screwed Up Really Big
Shortly after you read this HSBC will have settled with the US regulators for allowing Iran to launder 250 Billion dollars – yeah $250 billion dollars.
How much is that, well it’s just about the same amount of money that the IMF and EU have promised to put up to lend Greece to bail out Greece. That is not how much has been sent to Greece, but how much that has been sent and how much more money has been promised to continue to bail out Greece. In short it is an enormous amount of money that HSBC allowed Iran for a long period of time to escape sanctions of the entire western world all the while to arm itself to attack Israel and the west. 250 Billion is about half of Iran’s GDP and this amount of money would make this money laundering scheme about the 40th largest nation out of 198 nations by size of GDP.
The largest and most expensive natural disaster in the US was Hurricane Andrew at a paltry 25 billion!
The fine expected to be between 1 and 2 billion will barely dent the earnings of a company that made 12 billion dollars last year.
In one breath I fear what HSBC allowed to have happen. They have aided intentionally or unintentionally the west’s largest and most determined foe to operate nearly unfettered for years and allowed Iran to more rapidly gather those tools it has sought to destroy the west. This is an act of the highest level of treason and sabotage.
The pending fine has nothing to do with any divergent national interest between the UK and US for capital market dominance – both are too over regulated. They will loose the battle for 1 or 2 in the next 5 years and will be battling for 3rd and 4th place.
But I also think the real problem is this is just another failing of the management of HSBC. Its bad for HSBS when even Mexico fined HSBC 28 Million for laundering drug money proceeds. Now, the Reserve Bank of India, India’s Central Bank, is looking at HSBC and Standard Charter for laundering money and KYC matters. It just may be that HSBC is doing significant damage not on purpose but by error and sloth. As much damage can be done by error and sloth as by mal-intent but error and sloth can be more persistent and wide spread than any choreographed mal-intent.
In the end – I think this is the last wave of big bank fines – HSBC will have earned the status of Post Child of AML error and sloth or mal-intent. The next wave of regulatory fine will most likely be a split focus between securities broker dealers and trade finance.