Six months after it had to pay U.S. regulators $2 billion for years of laundering Mexican drug profits, financial giant HSBC has hired a former U.S. deputy attorney general to help it avoid a repeat of the problem.
James Comey was second in command at the Justice Dept. from 2003-2005, during the George W. Bush administration. Before that he was the chief U.S. prosecutor in New York City. Comey was a key figure in the obstruction of justice case filed against home style diva Martha Stewart in 2004.
Comey will provide legal advice to HSBC's new Financial Systems Vulnerability Committee, which reports directly to CEO Stuart Gulliver. He'll also serve as an HSBC assistant director.
In July a U.S. Senate committee condemned the "pervasively contaminated culture" at the bank. Its report said that in one year, between 2007 and 2008, HSBC-Mexico moved $7 billion to U.S. financial institutions. Bank officials promised to do more to prevent international money laundering. "What happened in Mexico and in the United States is shameful, it's unfortunate, it's very painful for all of us," Gulliver said at the time. Much of the money passed through the Cayman Islands, where the Mexican branch of the bank maintained an extensive virtual presence, although no physical facilities.
In December the U.S. Drug Enforcement Administration reported that between 2006 and 2010, HSBC-USA washed at least $881 million dollars for the Mexican Sinaloa Cartel and the Colombian Cártel del Valle del Norte. Because of lax accounting controls HSBC was a favorite with the cartels, according to DEA. The U.S. Treasury Dept. noted in a separate report that during the same period, HSBC-USA branches accepted cash deposits of $15 billion on American soil. While Treasury did not allege that all those funds were from narcotics trafficking, the implication was that many were.
In a press release HSBC said the new oversight committee would attempt to identify activities which could expose it to financial crimes or abuses, as well as avoid transactions which might damage the bank's reputation, "even though they are not technically illegal."
HSBC was founded in 1991 as a financial holding company by the Hong Kong and Shanghai Banking Corp. According to a March 31 filing with the U.S. Securities and Exchange Commission, it had total assets of $2.637 trillion on that date.
Jan. 30. - Lawyers with dirty hands
July 31 - HSBC to pay $2 billion for laundering Mexican drug profits
Jan. 19 - Dirty money washed in Mexico represents 3.6% of GDP
Oct. 25 - The drug dealer in pinstripes
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