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Money Laundering.
The Global Problem
What is Money Laundering?
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What is Money Laundering?
Money laundering is the process by which criminals attempt to hide and
disguise the true origin and ownership of the proceeds of their criminal
activities. The term Money Laundering is also used in relation to the
financing of terrorist activity (where the funds may, or may not, originate
from crime).*
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Criminal ActivitiesDrug
Traff icking Br ibery /
Corrupt ion
Prost i tut i
on
Gambli
ng
Tax
Evasion
Extor t ion
Robbery
and Fraud
Whit e Collar
Crimes
( including
InsiderTrading and
Securit ies
offences)Smuggl ing(arms, p eople, goods)
Coun terfei t ing and
Forgery
Kidnapp
ing
Serious Crime or Al l
Crimes?
Organise
d
Cr ime
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HSBC in Money
Laundering Scandal
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The top executives including the CEO ofHSBC Holdings plc(HBC)are set to face a tough inquiry by the congressional committee for theiralleged involvement in money laundering during the period 2004-2010.Moreover, the representatives of the regulatory authority Comptrollerof the Currency are also summoned for the judicial inquiry for theirnegligence. This reflects the U.S. governments constant efforts to
restrain funding that were made available for anti-social activities.
After year-long investigation into banks compliance with anti-moneylaundering rules, the subcommittee has accused the bank of failing tomeet those rules. This could possibly result in hefty penalties,amounting around a billion, for HSBC. Apart from the senatorialcommittee, the Department of Justice and the Office of Foreign AssetControl are also investigating the bank regarding the same.
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The investigation revealed substantial lapses in thebank's anti-money laundering compliance. This resultedinto a worldwide displacement of funds from riskiernations through the bank. Controversial transactions
pertaining to its Iranian clientele and the illegal narcoticstrade in Mexico have drawn maximum attention.
The U.S. and the European Union is seeking to curbIrans various contentious projects. As a result, it has
been trying to stop funding made available to the Iranian
government by keeping a tab on the countrys bankingactivities. Moreover, the U.S. is trying to curb drugs tradein Mexico. Consequently, HSBCs carelessness
regarding the money laundering rules has not gone downvery well with the American government.
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Other Banks Invo lved in the Scandal
Earlier this year, the U.S. government held Netherlands-basedING Groep NV(ING) responsible for transferring billions ofdollars through the American financial system to nations thatwere economically restricted by the U.S. As a result, INGbank ended up paying $619 million in penalties.
Moreover, Wachovia bank, acquired by Wells Fargo &Company(WFC) in 2008, was accused of facilitating fundstransfer related to Mexican Drug cartel. It ended up paying$160 million as compensation.
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HSBC profit drops after money laundering fine.
HSBC paid nearly $2 billion last year to settle a money-laundering case brought by U.S. officials that dealt with illicitdrug money from Mexico. It paid another $1.4 billion fine in
the U.K. for improperly selling financial products to customersand also wrote down the value of its own debt by $5.2 billion.
The company's shares down nearly 3 percent to 7.06 poundsin early trading in London.
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Presented by Jinkal SoniRoll no.163