In December 2012, HSBC Holdings Plc., a bank corporation chartered in the United Kingdom (and also in McLean, Virginia, as HSBC Bank USA), agreed to pay a record $1.92 billion in fines to U.S. authorities for laundering Mexican drug cartel money. As Assistant Attorney General Lanny Breuer said at the time, HSBC was being held accountable for “stunning failures of oversight—and worse” that allowed the money laundering to occur.
But the story isn’t over. Families of U.S. citizens murdered by the cartels just filed a lawsuit alleging HSBC’s responsibility in these victims’ deaths, claiming the bank enabled the killings via money laundering. According to Bloomberg Business, the case, Zapata v. HSBC Holdings Plc., will be tried in the U.S. District Court in the Southern District of Texas (Brownsville).
Lawyers representing the aggrieved families argue that HSBC can be held legally accountable for the murders—carried out by Mexican cartels in 2010 and 2011—because the bank’s money laundering violated the U.S. Anti-Terrorism Act. Interestingly, the lawsuit casts the Mexican cartels, known for their brutal tactics, as terrorists, which would be a major redefinition of the groups and their drug-related activities.
“The Mexican drug cartels are terrorists who routinely commit horrific acts of violence to intimidate, coerce, and control the civilian population and the government,” Richard Elias, a lawyer for the victims’ families, said in an email to Bloomberg. “HSBC was complicit in laundering billions of dollars for drug cartels and should be held accountable under the Anti-Terrorism Act for supporting their terrorism.”
According to a Justice Department investigation, HSBC severely understaffed its anti-money-laundering (AML) division. Despite evidence of money-laundering risks associated with doing business in Mexico, HSBC rated the risk “standard” in its risk category.
“As a result, HSBC Bank USA failed to monitor over $670 billion in wire transfers and over $9.4 billion in purchases of physical U.S. dollars from HSBC Mexico during this period, when HSBC Mexico’s own lax AML controls caused it to be the preferred financial institution for drug cartels and money launderers,” the Justice Department said in December, announcing the bank’s record fine.
“A significant portion of the laundered drug-trafficking proceeds were involved in the Black Market Peso Exchange (BMPE), a complex money-laundering system that is designed to move the proceeds from the sale of illegal drugs in the United States to drug cartels outside the United States, often in Colombia,” continued the Justice Department announcement.
Last month, U.S. District Judge John Gleeson, in Brooklyn, said a report produced by monitors overseeing HSBC’s AML cleanup efforts should be made public. Written by monitor Michael Cherkasky, the 1,000-page report details HSBC’s resistance to reform.
