Sep 7, 2012

Laura's Blog: HSBC: How laundering drug money fuels the drug war violence

Today the Peace Caravan will pay a visit to HSBC Bank, to protest the financial crimes that enable drug cartels to launder their huge illegal earnings. These crimes are rarely punished because of the importance of illegal money to the financial system. HSBC was caught with highly questionable practices between its US and Mexican branches and currently faces charges. They expect to settle for record fines, while avoiding criminal charges.

But financial crimes are not victimless, nor are they non-violent crimes. What looks like white-collar crime on the books is red with blood in the streets. The Caravan will challenge the bankers on Wall Street to look the victims in the eyes and will also call for stricter enforcement and punishment.

HSBC Money-Laundering Fuels Violence in Mexico


* HSBC is a British bank and the largest European bank. HSBC has vast interests in Mexico since 2002, when it bought Banco Bital, Mexico’s fifth largest bank. HSMX (HSBC in Mexico) has $2 billion dollars in assets.
* A Senate investigation found that HSBC transported $7 billion dollars in cash from Mexico to the United States in armed cars or aircraft in 2007 and 2008 alone. The Mexico-U.S. transfers far surpassed that of any other branch. Despite this highly suspicious activity and known cartel activity in the country, HSBC gave Mexico a low-risk rating for money laundering and permitted the transfers.
* A typical strategy of drug cartels to launder money is to smuggle US dollars from drug sales into Mexico, and then use international banks to send them back to the U.S. This is what HSBC did.
* HSBC was also found to have established accounts for Mexican money exchange businesses and other suspicious entities, and cleared billions of dollars in travelers cheques.
* The bank opened US dollar accounts in the Cayman Islands for Mexican clients for more than $2 billion dollars.

* The Mexican regulatory commission fined the bank $27 million in July of this year—a slap on the wrist for one of the world’s largest transnational financial institutions.

* On July 17, a Senate sub-committee published a lengthy report on HSBC case, concluding that it failed to apply anti-money laundering measures.

The over 300-page Senate report, from which most of these facts are taken, can be found here:

HSBC in the United States:

* HSBC is being sued in a class action suit for foreclosing on homes of veterans in the U.S. 

As hundreds of families are evicted from their homes due to a crisis caused by the banks themselves, drug money assures the banks themselves see growing profits.

We call for: 

* Real vigilance and strict enforcement of anti-money laundering laws

* Exemplary fines for banks found guilty of money-laundering, like HSBC.

* Divert military/police drug war funding to increased public funding for enforcement of money-laundering laws—destroy the financial structures of the drug cartels, not human lives.

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