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HSBC blood fingers – Money Laundry Scandel a Mexican Perspective

In the most recent campaign by the United Nations Office on Drugs and Crime (UNODC, for its acronym in English), states that organized crime generates annual revenues of a whopping 870 billion dollars.

Translation of the original article in Spanish by Dossier Politico by Saul Arellano

The most lucrative for organized crime are drug trafficking, which generates about 320 billion dollars annually, and counterfeiting, with revenues of 250 billion dollars a year.

Moreover, through human trafficking offenders get 32 billion dollars over 7 billion for alien smuggling in addition to that traffic in elephant ivory, rhino horn and tiger parts generates about 75 billion dollars.

The human costs of these activities are huge, especially considering that each year, the UNODC estimates that 2.4 million human beings fall victims of human trafficking, perhaps the most infamous crime committed in our time.

Two things are to be noted:

the first and most obvious is that these activities have a global character and can not be explained but for the existence of powerful networks operating at regional and global levels.

 The second part of a question: if this is the amount of money generated by transnational organized crime, how and by whom move? I.e. who has the power, technology and legality to embed into the legal economy  over a 1 trillion USD  from the criminal illegal organizations  world?

The answer is obvious: there is a complex global financial system that can launder money and gives criminals the ability to remain unpunished because through these resources can carry out legal transactions such as buying property vehicles, and in certain contexts, to weapons.

Why did HSBC do this? It turns out that the “angels” of this global bank “made mistakes” in monitoring suspicious accounts or regarded as “high risk”. According to the note of BBC News, signed by my colleague Julio Brito, is stated:

“HSBC said it takes Mexico´s compliance law seriously compliance (…) ‘We apologize, we will recognize these errors, accounting of our actions and commit ourselves completely to repair what was done wrong’, said the bank”.

Is this apology enough? What about Mexico´s Police Investigation ? What about the Financial Intelligence Unit of the Ministry of Finance? Surprisingly, the scandal was discovered and unrevealed by the investigations of the Permanent Subcommittee on Investigations of the Senate of the United States, but in Mexico the results are and reactions are lukewarm..

I quote again Julio Brito’s note: “The subsidiary of banking giant HSBC Mexico sent seven billion dollars in cash to the bank’s unit in the U.S. between 2007 and 2008, a volume that could only reach that size if included illegal drug profits.” (http://www.cronica.com.mx/nota.php?id_nota=676540)

According to an expert I consulted, the money laundering operations in Mexico are very easy to perform because the financial system is full of holes. For example, operations that money exchange offices have with banks are extremely lax, compared with the regulations of other countries.

Add to this the ease with which managers can access customer accounts, which facilitates the actions of triangulation that due to the operation of electronic banking today can be done in minutes.

Anyway, HSBC faces one of the most embarrassing scandals in its history, which opens one more question: Is it the only bank with these weaknesses operating in our country? That is something the authorities should investigate and seriously, if you really want to win the fight against drug trafficking.

The war on organized crime in Mexico has killed more than 50 000 dead. Now HSBC is an accomplice, at least by default in their controls, as was recognized last Tuesday, so not a bad idea and that the customers of this institution to continue providing profits to reconsider a bank that has indirectly contributed significantly to the bloodshed in our country.

If sending 7 billion dollars is considered impossible for a single bank, not to include narco resources, another question arises, how is that in a country with 52 million poor (on or below poverty line),  transnational banks get their biggest gains and transfers? See if the financial reports of Citi Group, Santander, BBVA, Scotiabank and other global banking institutions operating in Mexico.

While it is true that the fees (banking, transaction and credit cards) charge by these banks are draconian and interest rates that are the worst practices of usury, HSBC scandal should lead policy makers to reconsider that the level of looting reached by foreign banks, to feed their unstable global operations.

Source: Dossier Politico 19.07.2012  by Saul Arellano sarellano@ceidas.org

Filed under: Banking, Mexico, Risk Management, , , , , , , ,

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