It's hard to keep up with all the "money laundering" criminality going on all around us. Just days ago former House Speaker Denny Hastert got indicted for the "crime" of repeatedly withdrawing amounts of less than $10,000 at a time from his bank account in order to pay off a blackmailer. Then it was revealed that Citigroup is expecting to close its Banamex subsidiary because of inability to comply with government demands to control money laundering in the Mexican affiliate. Then on Friday it emerges that the U.S. Justice Department is accusing international bank HSBC of "serious deficiencies" in its money laundering controls.
The HSBC revelation arises out of a prior settlement between the bank and U.S. authorities back in 2012. HSBC paid some $1.9 billion to settle the money laundering allegations at the time, and as part of the settlement entered into something called a "deferred prosecution agreement" by which it agreed to have a government-appointed monitor snooping around it all the time and auditing and reporting back to the government on anything deemed to be a weakness. The monitor has recently produced a report of some 1000 pages or so, and we learn of its existence because the government has made a motion to keep it secret. According to June 5 article in the Guardian linked above:
HSBC’s procedures to prevent money laundering, sanction-breaking and criminal activity still have deficiencies so serious that to publicly disclose them would risk serious crime, the US Department of Justice has said. The embarrassing disclosure of continuing issues with HSBC’s processes is contained in a 16-page motion filed to a US court this week by the DoJ, which is seeking to keep confidential a report on the bank that is more than 1,000 pages long.
Of course, notable about all of these government efforts, and all the others that you will read about in the area of money laundering, is that none of them involve prosecution of the actual bad guys. Hastert's actions in paying blackmail may be unsavory, but nobody says they were illegal. The blackmailer? Hey, he's the cooperating witness -- of course he goes free. Citigroup and HSBC? They're involuntarily deputized law enforcement agents who supposedly can stop money transfers by the Mexican drug cartels if only they put in place enough "controls," whatever that may mean. What is the control that is supposed to stop depositing small amounts of cash at ATMs on one end and withdrawing same on the other end? I guess that deep secret is what the government is trying to hide by keeping this HSBC report confidential.
All of these guys should read the article in today's Wall Street Journal titled "Money Isn't Free, but Moving It Is Now Cheaper," by Christopher Mims. This is about lots of new money transfer systems, from Venmo to Apple to Square Cash to Google Pay. Oh, and then there's Bitcoin. Bitcoin doesn't involve banks, and they're not the only one. How about MoneyGram:
Alex Holmes, chief financial officer of MoneyGram, points out that 90% of the remittances his company handles are cash to cash, and they are between people who don’t even have bank accounts.
Really, how much loss of privacy and phony prosecutions of non-criminals do we need to go through in this exercise in total futility?