Fine in HSBC case equal to U.S. drug-war aid to Mexico

MEXICO CITY -- The U.S. government’s decision this week not to prosecute top executives at the global giant HSBC for the bank’s systematic laundering of money tied to violent Mexican drug cartels or to hostile regimes has resulted in an interesting number.

The U.S. fined the bank a record $1.92 billion on Tuesday, saying HSBC is essentially too big to prosecute. With assets, subsidiaries and investments spanning the globe, pressing criminal charges against HSBC could harm the global financial network at large, the Justice Department reasoned.

The fine, coincidentally, is about equal to the amount that the U.S. government has sent to Mexico in security aid in recent years under the Merida Initiative: A little more than $1.93 billion was sent by the Bush and Obama administrations to Mexico since 2007 to help Mexico fight the drug trade.

In other words, the money the U.S. government would collect from the British-based HSBC for laundering cartel cash would match the cost of the six-year security investment that the United States has made in a neighboring country fighting a bloody internal conflict.

The Merida Initiative funds for military hardware, intelligence upgrades and training is meant to help Mexico’s government fight a war against drug cartels, which has left at least 60,000 people dead or missing over six years but made no major dent in the trafficking of drugs to the United States.


HSBC operators in Mexico are accused of laundering $881 million in drug profits, primarily for the Sinaloa cartel, as well as other Mexican and Colombian traffickers. In doing so, it violated a variety of U.S. laws and bank regulations, including the Trading with the Enemy Act and Bank Secrecy Act.

“These traffickers didn’t have to try very hard,” U.S. Assistant Atty. Gen. Lanny Breuer said in announcing the decision against HSBC.

“They would sometimes deposit hundreds of thousands of dollars in cash in a single day in a single account,” using deposit boxes “designed to fit the precise dimensions of the tellers’ windows in HSBC’s Mexico branches,” Breuer said.

Pablo Galvan Tellez, a banking professor at Mexico’s Autonomous Technological Institute, said banks are their own first line of defense against laundering activity.

“At the end of the day, banks must be glass boxes, where we can see all the tubes of where the money is coming from and where it’s going,” Galvan said.

Academic Edgardo Buscaglia, a world expert on money-laundering and organized crime, said the fine was a “farce,” a laughable sum that amounted to “peanuts.” He told a radio interviewer Friday that the fine equaled five weeks of HSBC earnings.

HSBC apologized this week for its “mistakes” and promised to set up better safeguards against laundering.

The Sinaloa cartel, meanwhile, is believed to still control trafficking routes over much of western and northern Mexico.


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