Why the U.S. Treasury Killed a Latvian Bank

https://www.forbes.com/sites/francescoppola/2018/02/28/why-the-u-s-treasury-killed-a-latvian-bank/

by marksomnian • 8 years ago

101 26 8 years ago

forbes.com

curiousgal• 8 years ago

Tl;DR: They thought they were laundering money.

sschueller• 8 years ago

I guess if you are big enough you only get a small fine. e.g. HSBC

JumpCrisscross2• 8 years ago

small fine, e.g. HSBC

HSBC was fined nearly $2 billion [1]. (Still a shame none of the complicit went to jail.)

https://www.marketwatch.com/story/netflix-documentary-re-exa...

trhway• 8 years ago

Didn't HSBC get off by permanently opening all it's books/accounts worldwide to USG?

PeterisP• 8 years ago

From a local perspective, they kind of probably were doing so (though no official judgements yet to prove/disprove that).

They have a rather limited local presence, but enormous amounts of foreign (Russian&area) deposits that constitute the vast majority of their deals and profit. It's an open question whether the particular deals were technically prohibited or not, but it quite certainly involved handling a large amount of shady money that wasn't freely usable in the west directly and so needed services of this bank.

freddybobs2• 8 years ago

"At their scale, that's a small fine. Barely 10% of annual net profit."

HSBC was the bank of money laundering of the mexican drug cartels. They also helped fund terrorist organisations like ISIS. They made it possible to at scale deal drugs in the US.

When they were caught doing this - they shrugged and said they'd try better. Then they got caught doing it again. And they said sorry.

Eventually the government was aiming to indict the bank. There would be criminal charges. People would go to jail.

It is a small fine compared with their conduct. They got 'let off' at the last minute arguably because of 'systemic risk'. Too big to fail. Again.

You can find all about it on Dirty Money on Netflix.

jimrandomh• 8 years ago

"At their scale, that's a small fine. Barely 10% of annual net profit."

That quote does not appear in the linked article. Where does it come from, and who is "their"?

frgtpsswrdlame• 8 years ago

It's a misplaced comment, looks like it was meant to reply to another commenter below.

https://news.ycombinator.com/item?id=16496055

freddybobs2• 8 years ago

Sorry - that was from a comment below, and wasn't really what I was responding to. 'Their' means HSBC.

Assuming the documentary is accurate - that HSBC was the go to bank for money laundering. That was a big part of their business. That they went out of their way to hide transactions from the government (like transactions to ISIS and cartels). When caught they repeatedly got away with a shrug. That 100k people have been murdered related to mexican cartels - and the claim is that mexican cartels couldn't have operated at that scale without HSBC.

I was responding to the comment below that seemed to be saying the fine was 'big enough'. Which the documentary didn't agree with. The people that brought the charges and investigated HSBC didn't think so. Neither did the journalists who were there when the government tried to pass off the deal as a big success. The management didn't lose jobs. The worst that happened to them was that part of their bonuses were kept back.

Oh and the government dropped all charges in 2017. That part of the deal was the charges remained - ie they did commit crime but suspended sentencing.

https://www.reuters.com/article/us-hsbc-usa/hsbc-draws-line-...

https://inhomelandsecurity.com/hsbc-cartel-money-laundering/

https://www.rollingstone.com/politics/news/outrageous-hsbc-s...

(edit: grammar/spelling fixes)

Tech-Noir• 8 years ago

They also helped fund terrorist organisations like ISIS.

Do you have a link to this? All I can find on Google (apart from six members of staff being fired over a "mock beheading video") is a story about 13 HSBC customers who had links to ISIS.

chrisbennet• 8 years ago

"HSBC to pay $1.9 billion U.S. fine in money-laundering case"

https://www.reuters.com/article/us-hsbc-probe/hsbc-to-pay-1-...

Google "hsbc money laundering scandal" for more info.

zombieprocesses• 8 years ago

HSBC was the bank of money laundering of the mexican drug cartels.

HSBC was created in hong kong by the british to launder opium money after the Opium Wars.

""The Hongkong and Shanghai Bank" was founded by Scotsman Sir Thomas Sutherland in the then British colony of Hong Kong on 3 March 1865, and in Shanghai a month later, benefiting from the start of trading into China, including opium trading"

https://en.wikipedia.org/wiki/HSBC

Old habits die hard.

fulafel• 8 years ago

"Since the U.S. dollar dominates international transactions, banning U.S. correspondent banking relationships with ABLV amounts to shutting it out of the global financial network"

How does this figure? Anyone can buy/sell USD on the global FX market, and so pay/accept USD, no?

simonh• 8 years ago

It they can't do any deals or transactions denominated in dollars with any other financial institutions with links to the US, which is most of them. That also means the ones left that they can deal with can pretty much charge whatever they like.

wtfstatists2• 8 years ago

No because to really hold USD, your bank would need its own account on FedWire [1] (USD's Real Time Gross Settlement) in which money is legally guranteed. Alternatively your bank can have an account with a bank (called Correspondent Bank) that have account on FedWire.

Any more indirections would be too risky. If your bank has neither, then no other bank would talk to your bank over SWIFT/CHIPS/RIPPLE/etc, making your bank basically banned from USD banking.

Usually and and in this case, even accusations or investigation of money-laundering/etc would make a CB to derisk [2][3] and proactively cancel account of accused bank or CB would risk access to FedWire. This is how USG was able to force FATCA over the world.

[1] https://www.federalreserve.gov/paymentsystems/fedfunds_about...

[2] https://google.com/search?q=correspondent+bank+de+risking

[3] https://www.americanexpress.com/us/content/foreign-exchange/...

twic• 8 years ago

Any more indirections would be too risky.

I'm not sure this is quite true. There is a thriving and legitimate market in "eurodollars", deposits denominated in US dollars but held outside the US, and specifically beyond the reach of US authorities.

The question is whether you would be able to make much use of such deposits without US cooperation. It would definitely be difficult, but it might be possible. I am by no means an expert on this, but i came across an interesting case from the '80s - Libyan Arab Foreign Bank v Bankers Trust Co. Section 3.4 of this book describes it:

https://books.google.co.uk/books/about/Freezing_Assets.html?...

And there's a wider discussion here:

http://digitalcommons.wcl.american.edu/cgi/viewcontent.cgi?a...

The upshot is that a UK judge decided that it was possible to pay out a dollar balance held in London without involving the US. It seems there were several plausible ways to do it. Whether that's still true, i have no idea. Interesting stuff, anyway.

nraynaud• 8 years ago

I don’t see a lot of due process in this execution. Upholding the values of the constitution is only a week-end hobby?

sathackr• 8 years ago

Our government feels that the "all men" in "all men are created equal, that they are endowed by their Creator with certain unalienable rights" really just means US citizens.

The courts have held over and over that our constitution does not protect the rights of non-citizens. That's why we can legally execute a 'terrorist' in another country with a missile fired from a drone without even so much as them being charged with a crime. With all the false convictions of US Citizens that make it through our "due process," I wonder how many of those extrajudicial executions were based on incorrect information?

Rarely do they even want to respect the constitution for actual US citizens. The protections and rights granted are slowly being chipped away by the executive and legislative branches, and now even the judicial branch is becoming politicized.

Why the U.S. Treasury Killed a Latvian Bank

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