NEW YORK – Think your bank deposits are safe, just because the FDIC now insures accounts up to $250,000?
Better think again.
Until customer complaints forced a reversal of policy, the British multinational bank HSBC unilaterally imposed a restriction blocking customers from withdrawing large amounts of money from their own accounts, unless they could provide the bank with a “good reason” for it.
After the uproar in London when the BBC reported the new policy, HSBC issued a statement claiming the concern was money laundering. The bank notified customers that it would “not necessarily” deny depositors the ability to withdraw large amounts of cash from their accounts.
The HSBC explained in its statement that it has “an obligation to protect our customers, and to minimize the opportunity for financial crime.”
“However, following feedback, we are immediately updating guidance to our customer-facing staff to reiterate that it is not mandatory for customers to provide documentary evidence for large cash withdrawals, and on its own, failure to show evidence is not a reason to refuse a withdrawal,” HSBC said. “We are writing to apologize to any customer who has been given incorrect information and inconvenienced.”
The bank’s motivation may have stemmed from reports leaking out of Washington that U.S. regulators continue to find HSBC has failed to implement required measures to prevent money laundering amid fears that its weakened financial position might cause a run on the bank. The Comptroller of the Currency made the demand after HSBC was forced in December 2012 to pay a record fine of $1.9 billion in lieu of criminal charges. WND broke the blockbuster story that HSBC was widely engaged in laundering billions of dollars in conjunction with known criminal cartel drug lords and suspected terrorists.
The shocking series of WND stories beginning in February 2012 drew the attention of the Department of Homeland Security in New York and the Senate Permanent Subcommittee. WND reported on the 1,000 pages of bank records a former account relationship manager with the HSBC southern New York region brought exclusively to WND. The evidence showed the global banking giant was money-laundering billions of dollars using the Social Security numbers of current and former bank customers to create bogus proxy bank accounts to deposit and transfer internationally the illegal funds, unbeknownst to the account holders.
Federal Reserve investigations in 2012 found HSBC’s drug-related and terrorist-connected money-laundering violations included managing $19.4 billion in transactions for the Iranian government while Iran was under U.N.-imposed economic sanctions. The bank also was accused of making $7 billion in banknote transfers, most of which were drug-cartel related, from an HSBC branch in Mexico to an HSBC branch in the United States.
Remarkably, in a statement published by the Guardian of London in December 2012, Assistant Attorney General Lanny Breuer admitted the Obama administration Justice Department had concluded HSBC was too big to prosecute.
At a New York press conference, Breuer said that despite HSBC’s “blatant failure” to implement anti-money laundering controls and its willful disregard of U.S. sanctions, the $1.9 billion civil fine was preferable to the “dire consequences” of taking the bank to court.
The Guardian noted that had Justice Department prosecutors decided to press charges, HSBC would almost certainly have lost its banking license, “and the future of the institution would have been under threat and the entire banking system would have been destabilized.”
HSBC said it was “profoundly sorry” for what it called “past mistakes” that allowed terrorists, drug cartels and rogue nations like Iran to move billions around the international financial system while circumventing U.S. banking laws.
The Guardian noted HSBC processed for Mexico’s Sinaloa cartel, regarded then as the most powerful and deadly drug gang in the world, some $881 billion in drug trafficking money laundered through its accounts in the United States and worldwide.
In July 2012, WND published an analysis of Federal Election Commission records proving HSBC since 1997, the first year FEC electronic records were available, had generously donated millions of dollars to both Democrat and Republican members of the House of Representatives and the Senate who held committee assignments in which they oversaw banking and financial services regulation.
HSBC’s troubles as a rogue bank did not end there.
Last August, Reuters reported the London-based HSBC had earnings seriously depressed after announcing it had to reserve $1.6 billion for an anticipated settlement with the Federal Housing Finance Authority in Washington. The U.S. demanded reparations for HSBC for violating banking laws, this time by misrepresenting the quality of the collateral mortgage-backed securities bonds the bank aggressively but fraudulently marketed between 2005 and 2008.
Then, in October, Reuters reported HSBC had been ordered to pay some $2.46 billion to settle a class action lawsuit that charged Household International Inc., now HSBC Finance Corp., with fraudulently misleading investors about its predatory lending practices, the quality of its loans and the accuracy of its financial accounting from March 23, 2001, through Oct. 11, 2002.
When HSBC acquired Household International in 2003, the acquisition made HSBC the largest subprime lender in the U.S. at the time. HSBC played a major role in the housing industry bubble that finally burst with disastrous economic consequences in 2008 at the end of George W. Bush’s second term as president.
On Jan. 14, the Wall Street Journal’s Market Watch reported shares of HSBC Holdings fell 1.42 percent following a report HSBC may have overstated bank assets by as much as $92 billion.
Market Watch further reported analysts calculated HSBC may need to raise between $58 billion to $111 billion to continue operations. The analysts warned HSBC could be forced to cut or suspend dividends to meet the capital-raising goals.
In October 2013, WND reported a decision by banks in Cyprus not to allow customers to withdraw deposits preceded a government-imposed “bail-in” in which the Cypriot banking system agreed to confiscate up to 10 percent of customer deposits. The move was designed to recapitalize the nation’s ailing banking system, as required by the IMF as a precondition to obtaining an emergency Eurozone loan of 10 billion euros.