ALEX BRUMMER: Pandering to drug dealers and oligarchs

ALEX BRUMMER: Pandering to drug dealers and oligarchs


Bombshell revelations that a corrupt, money-laundering culture lies at the core of Britain’s biggest bank HSBC are a devastating reminder that the nation’s lenders have learnt nothing since the financial crisis of 2008 to 2009.

Back then, the banks took us to the financial abyss by selling bad debt in vast quantities around the world, having packaged it up and disguised it to make it look like a good investment.

When the ruse was rumbled and markets collapsed, the British taxpayer came to the rescue with billions of pounds worth of bail-outs.

And how have the banks repaid us? Not by cleaning up their act and focusing on improving services to personal customers and law-abiding companies.

HSBC in particular is reaping a bitter harvest as a result of the news on dirty money. Pictured: A HSBC branch in London

HSBC in particular is reaping a bitter harvest as a result of the news on dirty money. Pictured: A HSBC branch in London

Instead, firms such as HSBC, Standard Chartered, Barclays and Germany’s Deutsche (Donald Trump’s bankers!) allegedly opened their doors to oligarchs, drug dealers and tax cheats.

In its frantic effort to rebuild the income, capital and executive bonuses that had been wiped out by the financial crash, they behaved like the mafia. HSBC even allowed its branches to service Mexico’s notorious drug cartels.

HSBC in particular is reaping a bitter harvest as a result of the news on dirty money. Shares have plummeted to their lowest level for a quarter of a century — leaving its senior management with an all-but insurmount- able challenge.


The revelations of dirty dealings at the banks are contained in a cache of leaked internal documents known as the ‘FinCEN’ files, which detail more than 2,000 suspicious activity reports — covering a staggering £1.5 trillion ($2 trillion) worth of transactions — lodged with the U.S. Treasury’s Financial Crimes Enforcement Network.

Despite fines and threats of prosecutions, the leaks suggest the banks have been filing suspicious activity reports and continuing to take dirty money from mobsters, fraudsters and drug lords.

Among other things, HSBC allegedly allowed criminals involved in £61.5 million worth of fraud to transfer funds — and only acted when alerted by American investigators.

The news comes as the need for trust in Britain’s bankers has never been greater.

The pandemic has meant tens of millions of people have not been able to visit branches.

Covid has also provided huge money-making opportunity for scammers — the Government admits it might alone have been cheated out of £3.5 billion as result of fraudulent claims under the furlough scheme.

It will be terrifying for ordinary citizens to learn the very banks which plaster their websites with fraud warnings have been facilitating criminal masterminds and global tax cheats.

Both HSBC and Standard Chartered have a recent history of finding themselves on the wrong side of the law and have paid large fines to the American authorities.

The revelations of dirty dealings at the banks are contained in a cache of leaked internal documents known as the 'FinCEN' files. (Stock image)

The revelations of dirty dealings at the banks are contained in a cache of leaked internal documents known as the ‘FinCEN’ files. (Stock image)

Standard Chartered owned up to sanctions-busting in the Middle East and, in 2012, after a huge investigation by a Congressional committee and the U.S. Justice Department, HSBC admitted acting as a conduit for murderous Mexican drug cartels.

Evidence was heard about how drug bandits would arrive at branches in Mexico with sack loads of $100 bills which would be transferred into U.S. branches. After lengthy negotiations, HSBC agreed to pay a fine of £1.5 billion.

Critically, at the same time it was put on notice that if it did not clean up its act, its New York banking licence could be revoked. 

The licence is critical for HSBC — the biggest Western bank in Hong Kong and China — as the main conduit for U.S. financiers investing in China and vice-versa.

As if this were not bad enough, HSBC Private Bank based in Geneva was unmasked in 2015 as being at the centre of a massive tax evasion scheme.

An astonishing £138 billion in funds for 100,000 clients, including former African heads of state, were passed through some 20,000 offshore accounts, meaning they could not be traced for tax purposes.

Among the more astonishing disclosures — uncovered by a former HSBC software engineer, Herve Falciani — was that HSBC’s former chief executive Stuart Gulliver, when head of the HSBC’s investment bank, funnelled his own salary through Geneva and Panama to hide how well he was paid.

In the wake of this unholy catalogue of scandals, is it any surprise our faith in bankers has been shattered almost beyond redemption?

HSBC decided too late that it needed to clean up its act if its global credibility was not to be undermined.

It embarked on a large recruitment drive of ‘compliance officers’ — the internal police forces who monitor every transaction, every foreign exchange deal and the opening of every bank account to try to make sure complex laws and regulations are not breached.

HSBC now employs as many as 24,300 people worldwide to try to keep the bank free from fraudsters, terrorists and the like and is spending several billion a year on the clean-up.


In defending itself against the latest disclosures, HSBC points out that the new cache of documents, unmasked by the International of Consortium of Investigative Journalists and the BBC’s Panorama programme, pre-date this crackdown on fraudulent activity.

It argues the bank is a much ‘safer’ institution than it was in the swashbuckling years before and immediately after the financial crisis.

However, the 2,100 leaked suspicious activity reports cover the period from 2009 to as recently as 2017, which suggests the new procedures are hardly as watertight as HSBC would like to think in spite of enormous sums spent. 

It is one thing toughening up supervision — but quite another preventing rogue employees from ignoring them. 

If HSBC is naïve enough to think the revelations will not attract the attention of New York bank enforcers and the U.S. Justice Department — irrespective of when the offences occurred — it is living in cloud cuckoo land.

The ‘protectionist’ U.S. authorities never miss an opportunity to come down heavily on overseas banks deemed to have breached tough money-laundering laws.


Meanwhile, the banking industry body UK Finance reports that economic crime including fraud in Britain amounts to £7 billion a year and affects every citizen and every business across the nation.

It’s true there has been a push for more transparency and in recent years thousands of dodgy clients have been kicked out by banks.

But it is plain the global banks have still to clear the decks of wrongdoers. Given the dramatic fall in share price, investors obviously do not believe this will be the end of the matter. Sharp-eyed American prosecutors are certain to want their say.

Customers are appalled. Their demands are simple: they want branches which are convenient to use, their money to be secure, and fair overdraft charges.

They do not expect a bank to cater for the world’s criminals, oligarchs and autocratic regimes or to turn a blind eye to dirty money even as it is warning of the dangers of fraud.

The hypocrisy and disdain for clients by the nation’s overpaid bankers is breathtaking. We thought they were beyond the pale when we bailed them out after the financial crash. Their behaviour since has been simply unconscionable.

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