I am trying to be surprised to find criminal activity in Finance but I cannot work up the passion.
The UK happily lets in an estimated 90 billion a year of dirty money to be laundered in the City of London, and all we need do to stop it is enforce beneficial ownership registries.
The US holds non US transactions to a higher standard of proberity than onshore (foreign corrupt practises act)
I am still guided by two principles on this - that complete openness and transparency solves 80% of problems and rigorous competition solves the rest (my favourite phrase - a billionaire is an example of market failure)
"a billionaire is an example of market failure"
This is at least funny, but might have a lot of truth in it as well. I formulated something similar about the marching almost-monopolies like Apple and Facebook: they are a gigantic failure of competition.
The simple question is whether most billionaires have actually contributed $1B of effort in producing value. The answer is mostly no, that most of that value was extracted from other workers who were disproportionately less rewarded than people who were able to structurally secure more ownership than the value they conteibuted
My point is not some kind of value judgement on billionaires but that their wealth should have been competed out - there is not a cadre of multi millionaires who offered a billion went "no thanks i'm fine"
This is the first sentence to mention money laundering "The Government responded robustly to the attack on Sergei Skripal and his daughter, Yulia, in Salisbury in March 2018. But despite the strong rhetoric, President Putin and
his allies have been able to continue “business as usual” by hiding and laundering their corrupt assets in London."
Section 3 is called "Closing the Laundromat".
Writing this comment served to remind me that the publications from the UK Parliament are generally of very high quality (certainly anything I've ever read).
>I am trying to be surprised to find criminal activity in Finance but I cannot work up the passion.
I'll take greedy financiers ripping off other greedy financiers over the vast surveillance industry that Silicon Valley is currently building out. But everyone on these boards is innocent of that, of course.
"..in summary: an opaque Chinese conglomerate says that it is the largest shareholder of Germany’s biggest bank, and has claimed a seat on the board. But the publicly available trail of information ends in Bermuda, obscuring a crucial link in its convoluted chain of ownership, and the parties involved seem reluctant to say anything about it."
I also recommend Netflix’s Dirty Money. It covers the HSBC scandal. I am so disappointed in our American federal government. Totally a sold out of our justice system. Fuck that shit. It was literally a “too big to fail, too big to fuck with”. Disclaimer: I was okay with bail out - but I am not okay with letting these bankers get away with their crimes involving money laundering.
This whole Justice Department going after cash instead of convictions can be blamed largely on Eric Holder.
Matt Taibbi writes about this extensively in one of his books, I can't remember which, but the main points are included in this article for anyone interested.
I’m not so sure. The global economy is awash at the moment with money laundering, aggressive banking practices, and other shady activity.
It seems Australia (in particular) has had enough, and is starting to throw it into the public domain. Australia has a good reputation to follow through (see Catholic abuse commission)
The Australian public in particular has had a guts full of persistent high housing prices, aggressive foreign investment behaviour, and foreign hedge funds carving out Australian businesses.
The Australian government has no choice but to push hard to get regulators to go after the banks. They were asleep at the wheel for years and it was only after enormous pressure that they allowed a Royal Commission.
Now they are singing a different tune. I'll be very interested in seeing what happens.
Both major parties have enthusiastically consulting but never quite getting around to passing second tranche of anti-money laundering legislation [1].
Some people say no one is interested in passing it because it might reduce flows of money necessary for sustaining the price of Australian real estate.
second the reco- the most interesting thing I learned was the decision of whether or not to indict is pretty much the whole thing; the vast majority of white collar criminals never make it to trial, only the ones that don't negotiate a settlement.
>> When HSBC laundered money for the Mexican Cartel [1], just had to pay a one time fine of $1.92B [2] and say "we're sorry".
It was a little bit more than that. They had a deferred prosecution agreement, and had an independent monitor in the company that reviewed all steps to improve their compliance processes and could have triggered the DPA if they didn't improve.
I was working at HSBC during this time, and no-one took for granted that they would get passed their "parole" period.
A deferred prosecution agreement is in fact an AMNESTY (in exchange of an accomplishment of requirements), but most people involved in drug crimes never had that chance.
It's not my place to condemn nobody, but if you believe in fairness you have to realize that in a just society you either condemn white collars as anybody else, or condemn nobody. If the execs or anybody at HSBC was scared is of little to no value, when the decision of the justice system is unfair.
Which is what the article says straight in the subheading.
> If you're suspected of drug involvement, America takes your house; HSBC admits to laundering cartel billions, loses five weeks' income and execs have to partially defer bonuses
Nope, not this time. We currently have a Royal Commission and it's uncovering more and more shocking issues every day. The political pressure to prosecute bank executives is growing every day.
This time, I think there is a good chance someone in banking will go to jail. Why do you think the ACCC are going so hard on them?
I wonder what is the real reason why HSBC had to pay a fine. I don't buy money laundering charge, as the law is setup so that cartel existence is natural, so legislator had to take into an account that resulting huge black market will need banking facilities one way or another. If legislator didn't want cartels to exist, drugs wouldn't be made illegal in the first place.
> If legislator didn't want cartels to exist, drugs wouldn't be made illegal in the first place.
Cartels are far from dedicated to just drugs. Anything illegal that means money is their turf: kidnapping, ransom, prostitution, human trafficking, and a long etc.
Let's be blunt: many people push drug legalization because they just want recreational drugs, not because they want to fight crime. If all drugs were legalized, the cartels would still launder money from other areas, and you can't legalize everything that makes them money.
It is easy to start with drugs and then expand to other areas. Drugs are much much easier money than kidnapping or ransom. Once you hit the ceiling with the drugs it is only natural that you'll look for something else and you'll have money to fund it. Without the drugs it would have been much harder to organise other source of income.
I think by delaying repeal of prohibition most of the countries risk to have their cartels grow to the size of too big to fall. I think in many countries this has already happened - especially those where any logical debate about legalisation of drugs cannot be conducted. The corrupt reasons behind keeping it up are just too obvious, but nobody dares to change the status quo.
"Money laundering" is a bullshit, victimless crime. Deposit your cash in the wrong account: money laundering. Run a business that the banking cartel doesn't approve of (i.e. porn, gambling, weed) and you're practically forced into so called money laundering. It's just one of the many ways the rich keep getting richer while others are locked out of legit banking.
>Australia's scandal-plagued financial sector is at the centre of a national inquiry into misconduct.
Is there a country on this planet where the financial sector is not scandal-plagued? It is a serious question, with a cynic undertone, still, seriously: is there one? Can a "financial sector" work properly?
There is another option: a small bank that does not trade derivates and where people within know the customers not only by an excel sheet [1]. But then again this is impossible to scale. It's still nice to see.
> where people within know the customers not only by an excel sheet
Unless you don't count individual actions, this is probably nonexistent.
My hometown had a very small regional bank with roughly 3 branches total. One manager was caught skimming funds out of the vault. She was responsible for the closing amount at the end of the day, but she didn't know that there was another person who double checked behind her.
The other was someone who was skimming funds from deployed military and fixed-income retirees. I don't recall the exact process for deployed military, but it involved removing extra funds from their accounts when an auto-pay transaction (wireless bill, mortgage, etc.) hit. I don't know the details like if she somehow bumped the transaction amount or added a small transaction fee.
The fixed-income retirees was simple. When an elderly person came in to cash a check, she would palm a bill or two and short the customer.
Define a threshold for proper function and look around you. If all you read is breathless headlines and agitated facebook postings the world may look black, but sit down, define thresholds and then judge the financial sector by what you've decided is appropriate.
Money is transferred reliably and quickly? Bank accounts are safe, and the insurance banks need to pay is and remains cheap? Salescritters never offer "high-interest low-risk" investments? Define your threshold.
So you're not interested in scandals of the form "bank sold foo bar to pensioners as being a risk-free high-interest investment"?
There are a few tens of thousands of banks in Europe that haven't been in trouble with the law. By your condition, the number of banking scandals in my home country (Norway) is either zero or one since I was born, and that possibly law-breaking scandal involved nine or ten customers (they asked the regulator once and assumed that the answer applied to nine similar deals).
The world outside the Garden of Eden doesn't really get much better. The low cost of account insurance in most of the world tells a similar story: banking largely functions, even if not without warts and mishaps.
I think the headline blows things out of proportion. The ECM Syndicate banks overstated demand for a share sale, by the house bid....that the joint lead managers would've been on the hook for anyway (if the demand wasn't there, they had an underwriting backstop).
Yes they should've stated the booksizes included the joint lead manager interest but it isn't the as bad as the article and respective comments on here make out.
> "The allegations were "highly technical" and involved "an area of financial markets activity that has not been considered by any Australian court" or by regulators, Citigroup said in a statement."
So they found a highly technical loophole with no legal history. Very bad for PR because the public will not understand it and believe any negative simplified summary. They also stand to be slapped with a huge fine. I don't understand why they would take such a big risk. Must be desperate times.
49 comments
[ 2.8 ms ] story [ 93.7 ms ] threadThe UK happily lets in an estimated 90 billion a year of dirty money to be laundered in the City of London, and all we need do to stop it is enforce beneficial ownership registries.
The US holds non US transactions to a higher standard of proberity than onshore (foreign corrupt practises act)
I am still guided by two principles on this - that complete openness and transparency solves 80% of problems and rigorous competition solves the rest (my favourite phrase - a billionaire is an example of market failure)
Nonsense in more ways than one
https://publications.parliament.uk/pa/cm201719/cmselect/cmfa...
This is the first sentence to mention money laundering "The Government responded robustly to the attack on Sergei Skripal and his daughter, Yulia, in Salisbury in March 2018. But despite the strong rhetoric, President Putin and his allies have been able to continue “business as usual” by hiding and laundering their corrupt assets in London."
Section 3 is called "Closing the Laundromat".
Writing this comment served to remind me that the publications from the UK Parliament are generally of very high quality (certainly anything I've ever read).
I'll take greedy financiers ripping off other greedy financiers over the vast surveillance industry that Silicon Valley is currently building out. But everyone on these boards is innocent of that, of course.
[1] https://www.wsj.com/articles/deutsche-banks-u-s-operations-d...
"..in summary: an opaque Chinese conglomerate says that it is the largest shareholder of Germany’s biggest bank, and has claimed a seat on the board. But the publicly available trail of information ends in Bermuda, obscuring a crucial link in its convoluted chain of ownership, and the parties involved seem reluctant to say anything about it."
When HSBC laundered money for the Mexican Cartel [1], just had to pay a one time fine of $1.92B [2] and say "we're sorry".
Would be extremely surprised if the bank's legal teams let it get far into prosecution.
[1] https://www.rollingstone.com/politics/news/outrageous-hsbc-s... [2] http://money.cnn.com/2012/12/10/news/companies/hsbc-money-la...
Matt Taibbi writes about this extensively in one of his books, I can't remember which, but the main points are included in this article for anyone interested.
https://www.rollingstone.com/politics/news/eric-holder-wall-...
It seems Australia (in particular) has had enough, and is starting to throw it into the public domain. Australia has a good reputation to follow through (see Catholic abuse commission)
The Australian public in particular has had a guts full of persistent high housing prices, aggressive foreign investment behaviour, and foreign hedge funds carving out Australian businesses.
Now they are singing a different tune. I'll be very interested in seeing what happens.
Some people say no one is interested in passing it because it might reduce flows of money necessary for sustaining the price of Australian real estate.
[1] https://www.macrobusiness.com.au/2018/03/federal-government-...
yet here in the USA, thinking the same way would get you branded a facist..
It was a little bit more than that. They had a deferred prosecution agreement, and had an independent monitor in the company that reviewed all steps to improve their compliance processes and could have triggered the DPA if they didn't improve.
I was working at HSBC during this time, and no-one took for granted that they would get passed their "parole" period.
It's not my place to condemn nobody, but if you believe in fairness you have to realize that in a just society you either condemn white collars as anybody else, or condemn nobody. If the execs or anybody at HSBC was scared is of little to no value, when the decision of the justice system is unfair.
Which is what the article says straight in the subheading.
> If you're suspected of drug involvement, America takes your house; HSBC admits to laundering cartel billions, loses five weeks' income and execs have to partially defer bonuses
I don't think any of my colleagues at the time would have complained if the people responsible for the money laundering went to jail.
This time, I think there is a good chance someone in banking will go to jail. Why do you think the ACCC are going so hard on them?
Cartels are far from dedicated to just drugs. Anything illegal that means money is their turf: kidnapping, ransom, prostitution, human trafficking, and a long etc.
Let's be blunt: many people push drug legalization because they just want recreational drugs, not because they want to fight crime. If all drugs were legalized, the cartels would still launder money from other areas, and you can't legalize everything that makes them money.
At best, someone will resign.
More likely, the megacorps will be fined a token amount of money, and continue with business as usual.
Is there a country on this planet where the financial sector is not scandal-plagued? It is a serious question, with a cynic undertone, still, seriously: is there one? Can a "financial sector" work properly?
1) The banks face wide ranging, competent and impartial oversight and they know it. Unsure this exists but its theoretically possible.
2) The government is directly involved in bank activity so there is no one impartial to investigate scandal-worthy behavior.
3) The government and the banks are separate but bank oversight is negligible or ineffective. This causes scandal-worthy behavior to go unnoticed.
I suspect scandal free countries largely fall into category #2 and #3.
There is another option: a small bank that does not trade derivates and where people within know the customers not only by an excel sheet [1]. But then again this is impossible to scale. It's still nice to see.
[1] https://translate.google.at/translate?hl=en&sl=de&u=https://...
Unless you don't count individual actions, this is probably nonexistent.
My hometown had a very small regional bank with roughly 3 branches total. One manager was caught skimming funds out of the vault. She was responsible for the closing amount at the end of the day, but she didn't know that there was another person who double checked behind her.
The other was someone who was skimming funds from deployed military and fixed-income retirees. I don't recall the exact process for deployed military, but it involved removing extra funds from their accounts when an auto-pay transaction (wireless bill, mortgage, etc.) hit. I don't know the details like if she somehow bumped the transaction amount or added a small transaction fee.
The fixed-income retirees was simple. When an elderly person came in to cash a check, she would palm a bill or two and short the customer.
Money is transferred reliably and quickly? Bank accounts are safe, and the insurance banks need to pay is and remains cheap? Salescritters never offer "high-interest low-risk" investments? Define your threshold.
There are a few tens of thousands of banks in Europe that haven't been in trouble with the law. By your condition, the number of banking scandals in my home country (Norway) is either zero or one since I was born, and that possibly law-breaking scandal involved nine or ten customers (they asked the regulator once and assumed that the answer applied to nine similar deals).
The world outside the Garden of Eden doesn't really get much better. The low cost of account insurance in most of the world tells a similar story: banking largely functions, even if not without warts and mishaps.
Slap on the wrist at worst i'd say.
No jail? You fail.