Costs of money laundering explode with HSBC settlement


The view that financial settlements for fraudulent behavior have become a mere cost of doing business has been rife as of late.

If you believe that, then you would have to believe that costs have just exploded in light of the HSBC deal to settle charges of money laundering. HSBC will pay a gargantuan $1.9 billion to settle with federal and state prosecutors. That compares with a $619 million fine that ING had agreed to pay and a $327 deal that Standard Chartered just got hit with. Barclays and Credit Suisse are also under investigation.

"HSBC stood out, even among the scores of other foreign banks accused of flouting United States sanctions to transfer billions of dollars on behalf of rogue nations, according to several law enforcement officials with knowledge of the investigation. Prosecutors found that the bank had facilitated money laundering by Mexican drug cartels and had moved tainted money for Saudi Arabian banks tied to terrorist organizations," notes DealBook.

Have U.S. banks been spared yet another massive regulatory and compliance hit?

It's hard to say right now that they are in the clear. The OCC has been investigating Bank of America and JPMorgan for various AML issues. JPMorgan, for example, is being proved for possibly transferring funds in violation of sanctions against Iran and Cuba. Bank of America has generated controversy over reports that it possibly enabled banking by drug cartels in Mexico. Citigroup has also been under investigation.

For more:
- here's the article
- here's a Forbes article