Photo: HSBC being investigated for money laundering related to Mexican drug cartels
The U.S. Justice Departments is reportedly working on a case against HSBC bankers they say have laundered money from Mexican drug gangs.
Still at the beginning of the investigation, the Justice Department is building its case against the bank. The investigation began in August of 2010, when the Office of the Comptroller of the Currency criticized the bank for “highly suspicious activity.”
Some believe that if the bank is found to have laundered dirty money, HSBC could pay a record $500 million fine, as the Justice Department may look to make an example of the bank.
Banks seem to have gotten away with money laundering with little more than a slap on the wrist. The perfect example is that of the bank Wachovia, which managed to avoid prosecution entirely after they were accused of “serious and systematic” violations of banking regulations. This resulted in $420 billion passing through its accounts unmonitored. It was found to have laundered funds for the Sinaloa Cartel, which used the money to buy planes to smuggle drugs. In the end, the bank got away with just paying $110 million in forfeitures and another $50 million fine. While $160 million is a substantial amount of money to most, for the bank – which has since been taken over by Wells Fargo – it is a measly amount compared to its total earnings.
At the heart of the money laundering investigations are Mexico’s “casas de cambio,” exchange houses which are often used by Mexican criminal groups to launder funds. One common practice is for drug trafficking organizations to smuggle large amounts of hard currency, collected from U.S. sales, back over the Mexican border, then deposit it into these exchange houses. The funds are then wired by these institutions into U.S. bank accounts. In the case of Wachovia, one exchange house, Casa de Cambio Puebla, used these funds to purchase a number of airplanes on behalf of the Sinaloa Cartel.
After the probe into Wachovia began, Puebla simply shifted its accounts to HSBC, according to Mexican prosecutors. Puebla was headed by Pedro Alfonso Alatorre Damy, who is accused of handling the finances of the Sinaloa Cartel.
The Justice Department has said determination to prosecute individuals who handle Mexican drug money is a good step forward