Stefanie Ostfeld of Global Witness, member of the Task Force, had a great Op-Ed published in The Hill on Tuesday. She outlines the recent HSBC hearing involving money laundering and terrorist financing allegations against the bank. HSBC’s failure to comply with regulations or put in place safeguards against these types of illicit activities not only promotes a dirty global financial system, but it opens up the U.S. financial system to these criminals.
Stefanie believes three steps must be taken. She writes,
First HSBC must commission an external audit to look into how well it is managing money laundering risk. It must then publish the results. Other banks should do so as well. Given all that we have learned about the trustworthiness of banks in the past decade it is natural to no longer trust that they are actually doing what they say. (The recent Libor scandal, which resulted in the resignation of the CEO of Barclays, is the latest example of the banks apparent inability to regulate themselves.)
Second, if HSBC is found to have major breaches in anti-money laundering compliance, U.S. bank regulators must issue serious fines that will impact the bank’s bottom line and, if appropriate, criminal prosecution should be pursued. This is necessary to incentivize banks to change their reckless behavior.
Third, to close the loopholes that enable the banks and criminals to get away with money laundering, Treasury must require banks to identify and verify the ultimate owner of all bank accounts. In addition, Congress should pass the bipartisan Incorporation Transparency and Law Enforcement Assistance Act to stop criminals from misusing American shell companies to hide their identities to launder dirty money through the financial system.
Read the whole article here.
Apologizing is not enough. HSBC’s alleged actions are not an anomaly. Citibank, Wachovia and Barclays are among those who have been wrapped up in similar allegations. Therefore, the numerous shortcomings and loopholes that allow these crimes to happen must be combated with strong enforcement by regulators.
Money laundering is not a victimless crime. When illicit money is drained from developing countries, it stifles their economic development and prolonging abject poverty. The massive transnational organized crime that money laundering enables wreak havoc on society, as we’ve seen in Mexico. Now is the time for accountability and transparency, things everyone can afford.
Disclaimer: Unless specifically stated to be the views of the Task Force, the opinions expressed on this blog are solely the opinions of the individual blogger and are not necessarily those of the Task Force on Financial Integrity & Economic Development.