You're attempting to imply that HSBC was an innocent party, and that's simply nonsense.
HSBC was fined because it failed to follow the rules put in place to prevent money laundering. Often it completely failed to make any attempt to follow those rules. E.g.
"...The monitor’s findings described several incidents, among them one where an HSBC branch in Sinaloa, a Mexican state that has experienced much drug-related violence, opened a private-wealth account for a 19-year-old man who arrived with a bag containing thousands of dollars in cash. The man described himself as a shrimp farmer."
There was a consistent pattern of failing to flag, investigate, or report transactions that were clearly suspicious.
That's why HSBC was fined. There's no grey area here, and the laws aren't particularly onerous. They were simply ignored.
>it could trigger a collapse of the entire financial system as bankers exited the industry en-masse.
Considering the close association between banks and fraud/criminality, that would hardly be a bad thing.
So far in the UK we've had prosecutions for fraudulent mis-selling of payment protection insurance; fraudulent mis-selling of premium accounts; LIBOR rate fixing; forex rate fixing; and insider trading.
Last month DB settled out of court with traders who alleged - and provided evidence - of precious metal price fixing.
The entire financial industry is rotten to the core. It's the single biggest destroyer of genuine economic growth in the planetary economy, and it also has anti-democratic political influence which operates outside the usual constitutional checks and balances.
There is nothing remotely positive here. The industry needs to die, and it needs to be replaced by completely new structures and institutions that use the profit motive as an excuse for criminality in quite the same psychopathic ways.
> HSBC was fined because it failed to follow the rules put in place to prevent money laundering.
First, failing to follow rules put in place to prevent money laundering is not itself money laundering. Just like failing to follow rules put in place to prevent traffic accidents is different than driving your car into someone.
Second, the true story is one degree removed even from what you say. A key element of the government's case against HSBC was that it classified Mexico as "standard or medium risk" when classifying it as high risk would have triggered additional controls intended to prevent money laundering: https://www.justice.gov/sites/default/files/opa/legacy/2012/... (pages 7-8). The government states that HSBC "should have known Mexico was high risk" based on various publications discussing money-laundering risks in Mexico.
HSBC was not an innocent party, but it was guilty of regulatory rather than criminal violations. It failed to put country X in risk category Y; it failed to adequately staff it's AML department, etc. For those regulatory violations, it paid a fine, which was the appropriate punishment.
You're attempting to imply that HSBC was an innocent party
Not quite. I said explicitly that all banks are guilty of violating AML laws, because it's impossible not to be guilty.
You then go ahead and prove my point: someone turned up with some cash, and gave an explanation of where he got it. The banker in question accepted the story and the monitor found it to be "clearly suspicious".
"Suspicious" is such a vague standard that nobody can ever comply with such laws. There will always be transactions that are debatable, grey area, or turn out to be suspicious in hindsight but weren't at the time. Your own example proves this: apparently if you ran a bank nobody would ever be able to open an account and deposit money there, which is a problem, because being able to do that is kind of the point of having banks.
The story you link to admits as such in the very next paragraph after the shrimp farmer quote:
Compliance officials who must decide whether a bank should open an account or extend a loan can face a tough job, having to make the call based on the movement of money through existing accounts or sketchy data such as local knowledge and material found online. Regulators want to see signs that compliance departments are at least flagging suspicious transactions and customers. That didn’t appear to happen in the Sinaloa matter.
Maybe people open accounts that way in this part of Mexico all the time? Heck, maybe the person who opened the account thought it was suspicious but was afraid of turning up inconveniently dead if he turned the guy down. It's very easy for Americans to sit around on their Aeron chair in nice safe Washington DC and criticise people on the front line of the drug war for not trying hard enough.
But I'm not sure I'm arguing with a reasonable person. Your response to "the banking system might collapse" is "that would hardly be a bad thing", which is a position so far out that I doubt you will ever change your mind. What's your intended alternative? Bitcoin?
That said, my focus in this thread has been on money laundering rules, not trading fraud.
HSBC was fined because it failed to follow the rules put in place to prevent money laundering. Often it completely failed to make any attempt to follow those rules. E.g.
"...The monitor’s findings described several incidents, among them one where an HSBC branch in Sinaloa, a Mexican state that has experienced much drug-related violence, opened a private-wealth account for a 19-year-old man who arrived with a bag containing thousands of dollars in cash. The man described himself as a shrimp farmer."
http://www.wsj.com/articles/hsbc-struggles-to-bring-money-la...
There was a consistent pattern of failing to flag, investigate, or report transactions that were clearly suspicious.
That's why HSBC was fined. There's no grey area here, and the laws aren't particularly onerous. They were simply ignored.
>it could trigger a collapse of the entire financial system as bankers exited the industry en-masse.
Considering the close association between banks and fraud/criminality, that would hardly be a bad thing.
So far in the UK we've had prosecutions for fraudulent mis-selling of payment protection insurance; fraudulent mis-selling of premium accounts; LIBOR rate fixing; forex rate fixing; and insider trading.
Last month DB settled out of court with traders who alleged - and provided evidence - of precious metal price fixing.
The entire financial industry is rotten to the core. It's the single biggest destroyer of genuine economic growth in the planetary economy, and it also has anti-democratic political influence which operates outside the usual constitutional checks and balances.
There is nothing remotely positive here. The industry needs to die, and it needs to be replaced by completely new structures and institutions that use the profit motive as an excuse for criminality in quite the same psychopathic ways.