HSBC ‘turned blind eye while criminals laundered millions’
Leaked files claim UK’s biggest bank allowed crooks to transfer vast sums across the globe
HSBC let criminals and fraudsters transfer millions of dollars around the world, a cache of leaked files has revealed.
britain’s biggest bank continued to move money for a Ponzi scheme under investigation in several countries even after it flagged the transactions as suspicious.
HSBC is one of several banks whose name repeatedly crops up in a leak of secret us government documents dubbed the FINCEN files.
The files show that HSBC was still moving money through its us business to accounts in Hong Kong months after first sounding alarm bells about the £62million Ponzi scheme.
by the time it finally closed the accounts, they had been emptied by the fraudsters. london-headquartered standard Chartered, Germany’s Deutsche bank and us titans JP Morgan and bank of New york Mellon were also all said to have defied money-laundering crackdowns by moving huge sums of supposedly illicit cash for shadowy networks, the files reveal. The FINCEN files include more than 2,100 suspicious activity reports (SARS) made to the us Treasury Department’s Financial Crimes Enforcement Network between 2000 and 2017.
banks send SARS to the authorities if they suspect customers are up to no good. if they have evidence of criminal activity, they must stop moving the cash and freeze or close any accounts. but the files, first obtained by buzzfeed News and shared with the international Consortium of investigative Journalists, show the five major banks continued to wave through suspicious payments despite vowing to improve controls.
The SARS together cover more than $2trillion (£1.5trillion) of allegedly suspicious transactions. The Ponzi scheme in which HSBC became embroiled, called WCM777, was started by los Angeles-based Chinese national Ming Xu.
it led to the death of investor Reynaldo Pacheco, who was found underwater in California having been bludgeoned with rocks. He was recruited to help sign up more investors, but was thought to have been duped himself.
Ponzi schemes promise to pay high rates to investors, but only pay them by acquiring new investors and using new cash to pay off older members. Eventually the scheme becomes unsustainable. HSBC was alerted to the scam by California regulators as early as september 2013, and did spot suspicious transactions going through its systems. but it did not close the Hong Kong accounts used to collect the money until April 2014, after the us financial regulator filed charges against the fraudsters. by that time almost all the cash was gone.
Hsbc said: ‘starting in 2012, HSBC embarked on a multiyear journey to overhaul its ability to combat financial crime across more than 60 jurisdictions... HSBC is a much safer institution than it was in 2012.’
The files also reportedly show how JP Morgan, America’s biggest lender, processed more than £38million in payments over a decade for Paul Manafort, the former campaign manager for Donald Trump who quit in 2016 amid corruption claims flowing from his work with a pro-Russian political party in ukraine.
At least £5.2million of these transactions occurred after he had stepped down, files show.
JP Morgan told ICIJ it has taken a ‘leadership role’ in pursuing ‘proactive intelligence-led investigations’ and developing ‘innovative techniques to help combat financial crime’.
‘Waved through suspect payments’