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[Matt Taibbi]
This is the rare Wall Street case
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that the person on the streetcan understand.
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[Brett Wolf] The amounts of money involvedwere massive.
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Sometimes millions of dollars.
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[Anabel Hernández] Billions of dollars.
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[Patrick Keefe] Money that was beinglaundered from Mexican drug cartels.
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[Elise Bean] Drug lords, terrorists,they were facilitating these criminals.
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[Ken del Valle] It's greed, that's all it is. It's greed.
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[announcer 1] At HSBC, we're committedto helping protect the financial system
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on which millions of people dependby only doing business with customers
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who meet our high standards of transparency.
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[gunfire]
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[announcer 2] The world's local bank, HSBC.
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[Keefe] HSBC stands for the Hong Kong and Shanghai Banking Corporation.
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It is a huge global institution
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with, frankly, a kind of indifference tothe people that it was doing business with
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and the laws that govern financial services operations.
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[Don Semesky] There were
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hundreds of billions of dollarsin transactions
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that were not monitored.
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[Richard Elias] It's basic, simple money laundering
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and HSBC had its hand
right in the middle of it.
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Drug cartels themselves said,
in their own words,
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it is the place to bank.
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Everybody's seen Scarface,
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where the guy walks into the bank with the duffle bags full of cash.
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That was HSBC.
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[announcer] By working together, with each of us playing our part,
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we are leading the fight against financial crime,
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helping businesses to grow and communities to thrive.
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HSBC, together protecting a world of opportunity.
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[theme song playing]
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[Hernández] These banks, they move millions for the cartels every day
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and every dollar is helping to kill people in Mexico.
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Being a journalist in Mexico is very dangerous.
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I received threats of death
and my family received gun attacks.
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I mean, many of my sources
were kidnapped or murdered.
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My father wasthe most important figure in my life.
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When I told my fatherthat I wanted to be a journalist,
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he was very angry with me.
He hated me.
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He said, "You cannot be a jour--
Is that a profession?"
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[crowd cheering]
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Because in those years, in Mexico,
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many of the media were very corrupt.
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They were accepting bribes from the government.
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That was an old tradition.
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And I said, "No, I want to be a journalist
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and I will be
a very different journalist."
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I remember that when I published my first story,
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when my father saw this,
he really changed his mind about that.
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So my father was very proud of me
and of my job.
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In December 2000,
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my father was kidnapped and murdered.
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And that changed my life forever.
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Because when we went to claim for justice,the police asked us for money.
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They said, "If you want me to investigate,you have to pay."
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When, at a distance,
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you see the injustice,the corruption, it's one thing.
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But when you suffer this injustice
and the corruption,
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your point of view of the things
change completely, change your life.
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So, I really started to do
another kind of journalism.
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[reporter 1] Journalist Anabel Hernández
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has spent five yearsinvestigating the cartels
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and the toll they've taken on Mexico.
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[reporter 2] Hernández publisheda groundbreaking book
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linking top Mexican officials
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to the world's most powerful drug cartels.
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[Hernández] The drug cartelsare really destroying my country.
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Just this year...
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between January and July, 10,000 people
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have been murdered in Mexico
by the drug cartels.
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[sirens wailing]
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-[gunfire]
-[officer speaking Spanish]
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[reporter 1 in English] Another 24 hoursof terror in Ciudad Juárez.
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[agent yelling in Spanish]
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[reporter 1 in English] Fifteen teenagersgunned down at a birthday party
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including Luz Maria Davila's only two children.
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[speaking Spanish]
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[reporter 2 in English]
Mexican soldiers and police
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rushed to evacuate several schools,
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all signs of surging violence.
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[gunfire]
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[reporter 3] Vicious cartels battling
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to control the $14-billion-a-yearillicit trade,
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feeding an insatiable US appetitefor drugs.
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[siren wailing]
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[in Spanish] The increase in violence
kept going up little by little,
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especially in zones
where these drugs are produced
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and in the border areas where they cross
into the United States.
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[Victor Avila in English] It's a verysurreal experience because I grew up here.
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I grew up going to Ciudad Juárez.
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That was our place to go visit
and eat and visit family.
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And so it almost was very unreal for me
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that this violence was happening in a place that I love.
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These cartels are considered terrorist organizations
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in the sense that you wouldn't knowthe difference between the violence
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sometimes between ISIS and al-Qaeda,
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versus the drug cartels, the Sinaloa,
the Juarez cartel, the Gulf cartel,
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because of the level of barbarity
that they have.
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-[explosion]
-[distorted voices]
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The business is not the violence,
the business is not murdering people.
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The business is trafficking drugs
to get money.
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A lot of money.
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Millions of dollars, that is the goal.
All the--
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If you have to kill,
if you have to pay bribes,
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if you have to destroy one country,
it's an accident.
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The goal is the money.
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[Avila] The drugs come north,and the money goes south.
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It's a cycle that continues over and over.
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[del Valle] Cross-border smuggling has been going on
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ever since there's been a border.
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Everybody makes money off of this.
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Let's say you get a guy in Mexico.
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He gets offered $3,000
to cross a car with a compartment.
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[dog barks and growls]
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Now he's gonna cross the borderand take it over to the local Walmart,
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drop the car off.
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Leave the keys under the mat.
He's gonna go shopping for two hours.
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When he comes back,that car will be in that parking lot,
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but probably in a different spot.
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Somebody will have picked up that car,taken it to a garage,
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off-loaded the 300 pounds of marijuanaand brought the car back.
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That young man is gonna take it back to the people that loaded him up,
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and they're gonna give him $3,000.
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That's more than he can make in Mexico
in six months of honest labor.
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So what happens to the three kilos that were picked up?
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They will be taken to a stash house,
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where they will be distributed and sold on the street.
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Now how do you get the money back?
All kinds of ways.
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[Keefe] Moving the drugs is easy.
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Moving and laundering the money
is the hard part.
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As a narcotics agent,
you focus a lot on the drugs,
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but you then quickly learn that in orderto have an effective investigation,
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don't follow the drugs, follow the money.
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[Keefe] You get the drugs up hereand then all those drugs change hands,
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and American consumers pay US dollars
for those drugs.
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Now you've got to get the money
out of the US
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in order to get it
into the licit financial system.
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[Elizabeth Warren] Drug dealingis so enormously profitable
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that the amount of cash
that has to move is physically...
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If they had to do it in cash, it's huge.
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Drug trafficking generates street money.
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And street money, you're talking about
ones, fives, tens and twenties.
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The volume is just incredible.
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A million dollars in $100 billsweighs 22 pounds.
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In twenties is five times that.
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In fives is 20 times that.
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So you're talking about hundreds and hundreds of pounds of cash
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that you have to move.
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[Keefe] If you go to the border,
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you're gonna see a huge line of vehicles on the Mexico side,
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trying to go north,
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and all these fortifications and controls checking every single vehicle.
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Then you go to the other side,
nobody suspects anything.
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You're driving down from the US into Mexico.
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They're much less vigilant about checking the vehicles.
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[Olivera in Spanish] Money crossescontinuously from the US to Mexico
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that is a product of drug sales.
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This creates a big problemfor criminal groups because
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they can't just arrive at a bank
with a truck full of drug money.
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[in English] Once they manage to get
all this American cash,
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these US dollars, down into Mexico,
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there are a bunch of different things they can do with them,
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in order to launder it.
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You have ten millions of dollars.
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You need to move them.
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So how they do it?
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Through the banks.
Through the legal system.
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[del Valle] Let's say you're a bankerin Mexico, you're a mid-level banker.
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I walk up to you and I go,
"Listen, mister mid-level banker.
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I want a business loan for $300,000. I want to open up a bakery."
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They go, "Well, what equity do you have?"
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"Well, I got a million dollars in equity
for my $300,000 loan."
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Well, I think we can make you this loan.
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[del Valle] "We'll open up an accountfor you."
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You have a line of credit of $300,000.
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But it's backed by your
million-dollar deposit. Real simple.
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This seems okay.
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[del Valle] Think a banker's gonna wantto know where that money came from?
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Fine.
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How do they prove
that the one million dollars
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that I just took to a mid-level banker
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are the proceeds of
controlled substance trafficking?
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Maybe I just found it.
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Maybe I bought a used car, and it was inside of the used car.
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[Keefe] This is also about the banking culture in Mexico.
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There's an expression
that you often hear in Mexico,
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plata o plomo... "Silver or lead."
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[in Spanish] Take the cash...
or take a bullet.
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It's your choice.
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[Keefe in English] It's not purelythe case where you had bankers
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who were always willing to take a little kickback.
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Often, the person
who was walking in the door,
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sitting across from you,
saying, "I'd like to open an account,"
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would lay out on the desk
photos of your children and tell you,
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"You're going to open this account.
You're going to look the other way."
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They'll get you to do it either
by bribing you with silver
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or by killing you with lead.
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[Sandy Flockhart] Probably most of you know that HSBC has been trying to acquire
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a larger presence in Mexicofor a number of years,
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and that's why we're particularly pleased
the principal shareholders of Bital
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have decided to join with HSBC.
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Bital. Banco Bital.
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[in Spanish] Banco Bital
had a great presence in Mexican territory
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prior to this,
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particularly in Sinaloa,which is an area of drug production.
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Large amounts of money
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were coming into the bankwithout any form of control.
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There was no monitoring.
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[Keefe in English] HSBC had this system
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for rating how risky a banking culture was.
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Standard was the very lowest.
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Medium was higher than that.
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Cautionary was higher than that
and high was the highest.
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And for Bital,
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HSBC repeatedly said it's standard,they said it's the lowest level.
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So in spite of ample evidencethat this was an environment in which
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you would actually want to introduce
all kinds of protections,
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they said, "No. This isn't something
we should look at."
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There was an institutional decisionnot to look closely at transactions
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that were going on in Mexico at that time.
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[Hernández] So when HSBC bought Bital,
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they bought all these bank accountsthat belongs to members of the cartels.
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All this illegal Mexican money
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that belongs to the cartels
started to be everywhere.
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Many of the people that used to work for these corrupt Mexican banks
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started to work nowfor these transnational banks.
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HSBC had operated as sort of
a group of federated fiefdoms.
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You had these entities operating all over the world,
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that largely did their own thing.
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And it was based on business.
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They were looking to make money.
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They had these branches
that were taking in, in some cases,
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hundreds of thousands of dollars a day
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of questionable moneyfrom certain customers,
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and they were being exposed
to tremendous risk.
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[Keefe] In the casinos in Las Vegas,
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you have big spenders, high-rollers.
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And these are extremely valuable customers
for the casino.
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In 2007, there was an unusual customer.
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00:16:57,891 --> 00:16:59,393
They referred to him as Mr. Ye.
242
00:17:00,728 --> 00:17:02,771
His name was Zhenli Ye Gon.
243
00:17:02,855 --> 00:17:06,650
He was born in Shanghai,but he actually was a Mexican national.
244
00:17:06,734 --> 00:17:08,944
In Mexico, they called him El Chino.
245
00:17:09,862 --> 00:17:11,530
If you have a high-roller at a casino,
246
00:17:11,613 --> 00:17:14,992
you might get compeda room upstairs in the hotel,
247
00:17:15,075 --> 00:17:17,286
steak dinner at the restaurant.
248
00:17:17,369 --> 00:17:23,333
Zhenli Ye Gon was comped a Rolls Royce,
because he was that much of a big spender.
249
00:17:27,379 --> 00:17:32,134
When the Sinaloa cartel decided to move into meth in a big way,
250
00:17:32,217 --> 00:17:36,555
they would send free samples
in shipments of their other drugs,
251
00:17:36,638 --> 00:17:38,640
that people could give out to clients
252
00:17:38,724 --> 00:17:40,893
which would get them hooked
and create this new market.
253
00:17:41,602 --> 00:17:44,938
Zhenli Ye Gon ran a company in Mexico called Unimed,
254
00:17:45,022 --> 00:17:47,274
which was a pharmaceutical business.
255
00:17:47,357 --> 00:17:50,486
One of the things that Unimed had done was
256
00:17:50,569 --> 00:17:53,947
import to Mexico pseudoephedrine
257
00:17:54,031 --> 00:17:57,534
and other ingredients that could be used as precursor chemicals
258
00:17:57,618 --> 00:17:59,161
for making methamphetamine.
259
00:17:59,953 --> 00:18:02,289
There was a shipment of precursor chemicals
260
00:18:02,372 --> 00:18:04,583
and it was coming in for Zhenli Ye Gon.
261
00:18:04,666 --> 00:18:06,376
So at that point,
262
00:18:06,460 --> 00:18:11,006
they decided to raid Mr. Ye's home
in Mexico City.
263
00:18:11,090 --> 00:18:14,927
And this was this big kind of lavish,grand mansion.
264
00:18:15,761 --> 00:18:17,763
And when they got in there, they found
265
00:18:17,846 --> 00:18:22,142
a series of firearms and, everywhere, cash.
266
00:18:22,226 --> 00:18:24,812
Stacks and stacks and stacks of $100 bills.
267
00:18:24,895 --> 00:18:26,814
It's piled up waist high.
268
00:18:26,897 --> 00:18:30,442
205 million US dollars,
269
00:18:30,526 --> 00:18:34,196
and it turns out that Mr. Yeand his company, Unimed,
270
00:18:34,279 --> 00:18:37,116
have been doing a lot of banking
271
00:18:37,199 --> 00:18:41,453
in addition to having
this huge store of cash in his home,
272
00:18:41,537 --> 00:18:45,374
and that they've been doing this banking
at HSBC.
273
00:18:49,503 --> 00:18:55,134
When they had the raid on Ye Gon's house,
HSBC Mexico looked into their records,
274
00:18:55,217 --> 00:18:58,220
found out that he was
a long-time customer of theirs,
275
00:18:58,804 --> 00:19:00,681
that there had been a number of concerns
276
00:19:00,764 --> 00:19:04,226
about suspicious transactions involving his accounts.
277
00:19:04,309 --> 00:19:08,105
And in fact, HSBC London, the headquarters of the bank,
278
00:19:08,188 --> 00:19:11,733
had ordered them to close the account back in 2004.
279
00:19:11,817 --> 00:19:12,860
But guess what?
280
00:19:13,193 --> 00:19:14,194
They didn't close it.
281
00:19:16,238 --> 00:19:19,658
[Keefe] One of the standard elements of any kind of compliance program
282
00:19:19,741 --> 00:19:23,036
at a big financial institution,
they call it, "Know Your Customer."
283
00:19:23,704 --> 00:19:26,707
Know who you're dealing with.Who is this person who's coming in here
284
00:19:26,790 --> 00:19:29,376
and making these depositsfive times a week?
285
00:19:30,210 --> 00:19:32,546
We want to know who they actually are,
286
00:19:32,629 --> 00:19:34,590
where's the money coming from,
how do we explain this.
287
00:19:34,673 --> 00:19:40,262
The whole purpose of a bank
is that you're supposed to know, right?
288
00:19:40,345 --> 00:19:44,141
That's the idea behind
money laundering laws is that
289
00:19:44,224 --> 00:19:47,352
you're not supposed to just take in money
from anywhere.
290
00:19:47,436 --> 00:19:48,520
If you think it's dirty money,
291
00:19:48,604 --> 00:19:52,065
you have a responsibility.That's your job.
292
00:19:52,149 --> 00:19:54,776
[Wolf] Whether it's somethinglike drug trafficking
293
00:19:54,860 --> 00:19:59,072
or extortion,
or any of a litany of crimes,
294
00:19:59,156 --> 00:20:01,867
if these are occurringthrough your financial institution,
295
00:20:01,950 --> 00:20:05,120
you need to be capable of detectingand reporting them.
296
00:20:06,747 --> 00:20:09,750
At one point, we got ahold of documents
297
00:20:09,833 --> 00:20:14,296
that suggested there were serious problemsat HSBC.
298
00:20:19,718 --> 00:20:23,138
The problems were emerging
in various areas, various jurisdictions.
299
00:20:23,222 --> 00:20:25,599
They weren't just popping up in one place.
300
00:20:25,682 --> 00:20:28,310
And one place they were popping up
was West Virginia.
301
00:20:42,574 --> 00:20:47,162
[William Ihlenfeld] I've been a prosecutorever since I graduated from law school.
302
00:20:48,914 --> 00:20:52,042
Because my grandfather
and my father were both attorneys,
303
00:20:52,125 --> 00:20:56,463
and they both used to their legal training
and their law degrees to serve the public.
304
00:20:57,547 --> 00:21:00,425
So I sort of followed in their footsteps.
305
00:21:02,344 --> 00:21:05,264
Before becoming US Attorney in 2010,
306
00:21:05,347 --> 00:21:08,809
I was an assistant prosecuting attorney
in Ohio County and in Brooke County.
307
00:21:08,892 --> 00:21:13,105
And then in May of 2010,I was appointed by President Obama.
308
00:21:13,188 --> 00:21:16,066
After that,I served for six and a half years.
309
00:21:18,068 --> 00:21:19,945
As United States Attorney,
310
00:21:20,028 --> 00:21:24,032
you are the chief federal lawenforcement officer within your district.
311
00:21:24,116 --> 00:21:27,244
Any federal crime that occurs
in the Northern District of West Virginia,
312
00:21:27,327 --> 00:21:30,038
the US Attorney's responsible
for prosecuting.
313
00:21:36,837 --> 00:21:41,383
Barton Adams was a doctorin Vienna, West Virginia.
314
00:21:41,466 --> 00:21:45,637
He had a business known as
Interventional Pain Management.
315
00:21:46,471 --> 00:21:49,641
He frequently prescribed opioidsto his patients
316
00:21:49,725 --> 00:21:54,646
who were dealing with some kind of painthat required a Schedule II narcotic.
317
00:21:56,106 --> 00:21:58,984
The suspicion was thathe was committing fraud
318
00:21:59,067 --> 00:22:01,820
with Medicare and West Virginia Medicaid.
319
00:22:01,903 --> 00:22:05,574
Not surprisingly,
he also failed to report all the income
320
00:22:05,657 --> 00:22:08,201
that he received
as a result of this scheme.
321
00:22:08,285 --> 00:22:12,748
So he underreported his income,
he filed false tax returns.
322
00:22:12,831 --> 00:22:15,375
And then he also laundered this money.
323
00:22:16,126 --> 00:22:19,129
[Wolf] But as they looked atthe transactions linked to this fraud,
324
00:22:19,504 --> 00:22:21,465
they started looking at the bank involved,
325
00:22:21,548 --> 00:22:24,593
because they saw that there were
a lot of transactions
326
00:22:24,676 --> 00:22:27,637
that were criminal
that hadn't been detected.
327
00:22:27,721 --> 00:22:32,017
And they realized a lot of thesewere coming from HSBC.
328
00:22:32,726 --> 00:22:34,895
[Ihlenfeld] What the investigators found is that
329
00:22:34,978 --> 00:22:39,691
Dr. Adams and his relation to HSBC
was just the tip of the iceberg.
330
00:22:40,317 --> 00:22:45,197
They found that the anti-money launderingprogram at HSBC was very lax,
331
00:22:45,280 --> 00:22:50,660
that it was not looking at alertsthat were being generated by the system.
332
00:22:50,744 --> 00:22:51,995
And it was missing
333
00:22:52,079 --> 00:22:55,749
not just money being laundered
by a doctor in Vienna, West Virginia,
334
00:22:55,832 --> 00:22:58,627
but also hundreds of millions
if not billions of dollars
335
00:22:58,710 --> 00:23:03,131
that were being moved through the bankby other criminal organizations,
336
00:23:03,215 --> 00:23:05,759
by drug cartels and by organizations
337
00:23:05,842 --> 00:23:09,721
that we believed were associated
with terror financing.
338
00:23:12,724 --> 00:23:14,226
[Bean] In 2010,
339
00:23:14,309 --> 00:23:19,731
the OCC issued a 31-page
very intense order,
340
00:23:19,815 --> 00:23:22,818
describing money laundering problemsat HSBC.
341
00:23:23,568 --> 00:23:27,656
It was very unusual to seesuch a long, detailed order like that,
342
00:23:27,739 --> 00:23:30,492
requiring so many changesin the bank procedures.
343
00:23:31,409 --> 00:23:35,705
That letter went to HSBC
to put them on notice that
344
00:23:35,789 --> 00:23:39,584
some suspicious activity with the bank
had been uncovered
345
00:23:39,668 --> 00:23:43,797
and that they were going to takea closer look at HSBC.
346
00:23:44,881 --> 00:23:48,009
One of the things the bank was ordered
to do to fix its problems
347
00:23:48,093 --> 00:23:52,222
was go back and look at many transactions
348
00:23:52,305 --> 00:23:55,767
that had been conducted backwhen they weren't properly monitoring,
349
00:23:55,851 --> 00:23:57,769
which is a massive undertaking.
350
00:23:58,854 --> 00:24:02,190
So they set up this office space
in Newcastle, Delaware,
351
00:24:02,274 --> 00:24:05,235
and they brought in various executives,
352
00:24:05,318 --> 00:24:07,571
and pretty much any consultantthey could find.
353
00:24:07,654 --> 00:24:09,156
They needed bodies.
354
00:24:09,239 --> 00:24:13,368
And one of those executives
was Everett Stern.
355
00:24:26,423 --> 00:24:27,257
[man] Stern.
356
00:24:27,340 --> 00:24:28,842
Four. Mark.
357
00:24:31,052 --> 00:24:37,017
Sure, I mean, um, I mean,
my dream was to join the CIA
358
00:24:37,100 --> 00:24:40,187
and I was a candidate
for the Clandestine Service, um,
359
00:24:40,270 --> 00:24:43,607
and that was my plan.
That was my dream.
360
00:24:43,690 --> 00:24:47,194
Um, and I ended up getting rejected
from that program.
361
00:24:47,277 --> 00:24:50,155
And then, I saw this position online
362
00:24:50,238 --> 00:24:53,116
for this anti-money laundering
compliance officer position,
363
00:24:53,200 --> 00:24:58,914
and the job was for HSBC Bank,
and I never heard of HSBC Bank before.
364
00:24:58,997 --> 00:25:01,666
I didn't really know what it was,
365
00:25:01,750 --> 00:25:05,086
but I figured anti-money laundering,
that could help make a difference.
366
00:25:05,170 --> 00:25:06,922
You have to understand,
after the CIA rejection,
367
00:25:07,005 --> 00:25:09,841
I was devastated, because I...
368
00:25:09,925 --> 00:25:11,468
My main purpose is to...
369
00:25:11,551 --> 00:25:16,097
I wanted to serve a life with meaning,
and I wanted to serve the country, um,
370
00:25:16,181 --> 00:25:20,560
and be a, you know,
[stammers] an instrument of goodness
371
00:25:20,644 --> 00:25:23,063
and be able to serve
a higher purpose and meaning.
372
00:25:23,688 --> 00:25:25,440
And that's just not what happened.
373
00:25:35,033 --> 00:25:37,202
I remember, like, my first day on the job.
374
00:25:37,702 --> 00:25:42,040
It wasn't like a bank building, it was a shopping center.
375
00:25:47,295 --> 00:25:51,841
There were all these people in jeans and T-shirts, and I'm in this suit.
376
00:25:52,717 --> 00:25:55,053
There are all these empty cubicles,
377
00:25:55,136 --> 00:25:57,138
the walls were half painted,
378
00:25:58,556 --> 00:26:01,935
and there are maybe 15 compliance officers
in the whole department.
379
00:26:02,018 --> 00:26:06,022
At the time, I thought they hired me 'cause I was this smart guy
380
00:26:06,106 --> 00:26:09,150
and I had it all going and everything.
381
00:26:09,234 --> 00:26:12,445
No. They hired me 'cause I was an idiot
and didn't know what I was doing.
382
00:26:13,863 --> 00:26:15,657
What I learned was that most of that
383
00:26:15,740 --> 00:26:19,160
one-story shopping center was a call center.
384
00:26:20,412 --> 00:26:24,457
So that was where HSBC credit card people
were calling to collect debts.
385
00:26:24,541 --> 00:26:27,377
All these people in T-shirts and jeans and everything,
386
00:26:27,460 --> 00:26:29,462
those were all the debt collectors.
387
00:26:29,963 --> 00:26:32,924
And these people just... They didn't...
388
00:26:33,008 --> 00:26:35,552
They had the look on them
that they didn't care.
389
00:26:35,635 --> 00:26:37,137
And I knew right away...
390
00:26:37,220 --> 00:26:39,431
The minute I sat down at my cubicle,
391
00:26:39,514 --> 00:26:41,641
I knew I did not belong there,
392
00:26:41,725 --> 00:26:43,101
and I was in trouble.
393
00:26:44,269 --> 00:26:45,353
It was all for show.
394
00:26:45,437 --> 00:26:47,939
These anti-money laundering procedures,
395
00:26:48,023 --> 00:26:50,650
the bank was essentially forced to hire
396
00:26:50,734 --> 00:26:53,903
a certain number of people
as a condition of their,
397
00:26:53,987 --> 00:26:57,324
"I promise
we'll never do this again" settlements.
398
00:26:57,407 --> 00:26:58,325
But they were phony.
399
00:26:58,408 --> 00:27:01,828
And that's what
Everett Stern's story is really all about.
400
00:27:03,121 --> 00:27:07,292
[Stern] I just sat down,and they told me to start clearing alerts,
401
00:27:07,375 --> 00:27:09,586
and an alert was generated
402
00:27:09,669 --> 00:27:13,006
when a certain rule
was broken in the system.
403
00:27:13,715 --> 00:27:18,261
Now, the problem HSBC had is that they had a major backlog of these alerts.
404
00:27:19,012 --> 00:27:21,931
So this is why they had to hire
as many people as possible.
405
00:27:22,015 --> 00:27:25,852
It wasn't actually proving
that the entities were legal.
406
00:27:25,935 --> 00:27:29,689
It was just showing the regulators
that we tried. That was it.
407
00:27:30,273 --> 00:27:33,777
But he wasn't the only person
telling this story.
408
00:27:33,860 --> 00:27:36,321
I had been hearing for monthsfrom these people
409
00:27:36,404 --> 00:27:39,491
that were working at this facility at Newcastle that
410
00:27:39,574 --> 00:27:41,284
they were seeing things
411
00:27:41,368 --> 00:27:46,706
that struck them
as an inappropriate approach
412
00:27:46,790 --> 00:27:50,668
to going back and looking at transactions.
413
00:27:50,752 --> 00:27:54,464
So OFAC has a list of companies
that we can't do business with.
414
00:27:54,547 --> 00:27:57,884
It's actually called
the OFAC Sanctions List.
415
00:27:57,967 --> 00:27:58,968
And on this list,
416
00:27:59,052 --> 00:28:01,888
there's Russian mobsters, terrorists, drug cartels,
417
00:28:01,971 --> 00:28:04,516
any bad guy you can possibly think of.
418
00:28:04,599 --> 00:28:06,393
And this company called Tajco
419
00:28:06,476 --> 00:28:10,188
was listed on this OFAC Sanctions announcement.
420
00:28:10,271 --> 00:28:11,731
So I ran through the system
421
00:28:11,815 --> 00:28:16,528
Tajco and Hassan Tajideen,
which is the CEO of Tajco,
422
00:28:16,611 --> 00:28:18,530
and the Tajideen brothers are...
423
00:28:18,613 --> 00:28:21,658
They were named as actual financiers for Hezbollah.
424
00:28:21,741 --> 00:28:25,703
And I found that there were thousandsand thousands in transactions
425
00:28:25,787 --> 00:28:28,289
that were approved
and that went through the bank,
426
00:28:28,373 --> 00:28:33,545
and it didn't make sense because
if they're on the OFAC Sanctions List,
427
00:28:33,628 --> 00:28:35,797
how are these wires getting through?
428
00:28:36,423 --> 00:28:40,176
And then I noticed they were putting little dots and dashes
429
00:28:40,260 --> 00:28:44,055
in the actual names in the wire filter.
430
00:28:44,139 --> 00:28:49,769
For instance, if Tajco was sending money
from Hezbollah to some other organization,
431
00:28:50,437 --> 00:28:55,900
instead of T-A-J-C-O,it would be T-A-J-dot-C-O.
432
00:28:55,984 --> 00:28:58,653
Or "TAJ-CO."
433
00:28:58,737 --> 00:29:03,283
And that's how they criminally
manipulated the wire filter
434
00:29:03,366 --> 00:29:07,036
to allow money laundering for terrorists
and drug cartels.
435
00:29:08,788 --> 00:29:11,416
And I realized that this was way beyond
436
00:29:11,499 --> 00:29:15,003
a whole bunch of idiots in cubicles trying to close alerts.
437
00:29:16,212 --> 00:29:20,425
This is why three weeks in,
I started passing information to the CIA.
438
00:29:23,636 --> 00:29:25,680
[Elias] What is clear is that
439
00:29:25,764 --> 00:29:31,352
HSBC's role in this conduct
is not marginal, it is substantial.
440
00:29:31,436 --> 00:29:36,900
HSBC London saw the whole picture
and did nothing.
441
00:29:46,409 --> 00:29:49,662
[Carl Levin] Good morning, everybody. Today's hearing will examine
442
00:29:49,746 --> 00:29:55,084
the money-laundering, drug-trafficking,and terrorist-financing risks
443
00:29:55,168 --> 00:29:59,172
when a global bank uses its US affiliate
444
00:29:59,255 --> 00:30:04,552
to provide US dollars and access
to the US financial system
445
00:30:04,636 --> 00:30:07,597
to a network of high risk affiliates.
446
00:30:08,264 --> 00:30:10,058
[Bean] Senator Levin has been
447
00:30:10,141 --> 00:30:12,185
on the permanent subcommitteeon investigations
448
00:30:12,268 --> 00:30:13,728
for about 15 years.
449
00:30:13,812 --> 00:30:17,232
And he's looked at
money laundering conduct
450
00:30:17,315 --> 00:30:20,777
and misconduct by financial institutions
on a number of occasions
451
00:30:20,860 --> 00:30:22,070
during that time period.
452
00:30:22,987 --> 00:30:27,492
When we looked at HSBC,
we found a lot of shocking information.
453
00:30:28,701 --> 00:30:30,787
This global bank was allowing
454
00:30:30,870 --> 00:30:34,165
a lot of dirty money to run through the United States.
455
00:30:34,707 --> 00:30:38,586
[reporter 1] The banking giant isunder investigation by the US Senate,
456
00:30:38,670 --> 00:30:42,841
accused of turning a blind eye to billions of dollars in money transfers.
457
00:30:42,924 --> 00:30:46,386
[reporter 2] The investigation focusedon HSBC having lax control
458
00:30:46,469 --> 00:30:49,681
of dealings between 2006 and 2009.
459
00:30:49,764 --> 00:30:51,099
[reporter 3] And internal documents show
460
00:30:51,182 --> 00:30:55,103
HSBC executives knew exactly what they were doing.
461
00:30:55,186 --> 00:30:58,898
"We are allowing organized criminals to launder their money."
462
00:30:58,982 --> 00:31:00,233
[Keefe] The Sinaloa cartel,
463
00:31:00,316 --> 00:31:03,653
an organization identifiedin the Senate report
464
00:31:03,736 --> 00:31:06,114
as having benefited from this money laundering,
465
00:31:06,197 --> 00:31:11,119
is unquestionably responsible
for tens of thousands of deaths in Mexico.
466
00:31:11,953 --> 00:31:15,081
[Avila] The murders, the beheadings,
467
00:31:15,164 --> 00:31:18,126
the shootings, the kidnappings, the extortion,
468
00:31:18,209 --> 00:31:20,086
all of that has to do with the money.
469
00:31:21,921 --> 00:31:24,465
And having the bank participate with that,
470
00:31:25,550 --> 00:31:28,595
they've become
part of this terrorist organization.
471
00:31:28,678 --> 00:31:31,097
Do you swear the testimony you'll give
before this subcommittee
472
00:31:31,180 --> 00:31:32,348
will be the truth, the whole truth,
473
00:31:32,432 --> 00:31:34,434
and nothing but the truth,
so help you, God?
474
00:31:34,517 --> 00:31:37,145
[Bean] Some of the witnesses included Stuart Levey...
475
00:31:37,228 --> 00:31:40,857
My name is Stuart Levey,
I am the Chief Legal Officer of HSBC.
476
00:31:40,940 --> 00:31:43,276
...who had been a treasury official
in the United States.
477
00:31:43,359 --> 00:31:44,861
We had Irene Dorner.
478
00:31:44,944 --> 00:31:47,196
Thank you,
Chairman Levin and Senator Coburn.
479
00:31:47,280 --> 00:31:50,575
My name is Irene Dorner
and I serve as President and CEO
480
00:31:50,658 --> 00:31:55,163
of HSBC Bank, USA,
and HSBC North America Holdings Inc.
481
00:31:55,246 --> 00:31:58,875
At our hearing,
HSBC did not deny the facts.
482
00:31:58,958 --> 00:32:01,878
Instead, what they said is,"We're trying to do better."
483
00:32:01,961 --> 00:32:06,674
HSBC's compliance history,
as examined today, is unacceptable.
484
00:32:07,050 --> 00:32:11,554
HSBC has learned some very hard lessons
from the experience of the past few years,
485
00:32:11,638 --> 00:32:15,433
but we have taken very substantial steps
to address the problems
486
00:32:15,516 --> 00:32:19,062
that we, our regulators
and this subcommittee have identified.
487
00:32:19,145 --> 00:32:21,856
The problem is,
they've been saying that for many years
488
00:32:21,940 --> 00:32:24,484
and the problems are not resolved.
489
00:32:25,568 --> 00:32:29,197
[Warren] You're dealing in drug moneyhere. You're not supposed to do that.
490
00:32:29,280 --> 00:32:30,907
That's against the law.
491
00:32:30,990 --> 00:32:34,577
HSBC more than once gets caught and says,
492
00:32:34,661 --> 00:32:37,997
[gasps] "You're right,
we'll be more careful in the future."
493
00:32:38,081 --> 00:32:43,002
Do you agree that given past commitments
that have not been kept,
494
00:32:43,086 --> 00:32:46,047
that the bank has a heavy burden of proof,
495
00:32:46,130 --> 00:32:51,177
both as to changing behavior
and as to changing the culture?
496
00:32:51,260 --> 00:32:55,014
It is quite clear that we've had failures
in the past which we deeply regret.
497
00:32:55,098 --> 00:32:58,309
And I would agree
that we have some way to go
498
00:32:58,393 --> 00:33:02,730
to regain the trust of our regulators
and of yourselves on this subcommittee.
499
00:33:02,814 --> 00:33:04,107
We welcome the commitments.
500
00:33:04,190 --> 00:33:05,733
We welcome the apologies.
501
00:33:05,817 --> 00:33:08,903
But there is that nagging question
of accountability,
502
00:33:08,987 --> 00:33:11,364
which others are going to have to judge.
503
00:33:16,119 --> 00:33:19,789
[Ihlenfeld] The primary role of a US Attorney really is as a prosecutor.
504
00:33:20,456 --> 00:33:24,919
You are prosecuting drug crimes,
gun crimes, white collar crimes,
505
00:33:25,003 --> 00:33:27,797
all of the federal crimes
that Congress has created.
506
00:33:29,215 --> 00:33:33,636
And so the Barton Adams case, it just grew in scope very quickly.
507
00:33:33,720 --> 00:33:35,805
And from 2008 until 2010,
508
00:33:35,888 --> 00:33:38,975
our investigators worked on itand put in thousands of hours.
509
00:33:41,602 --> 00:33:45,606
[Wolf] Anytime a prosecutor wants to takeon a bank over money laundering issues,
510
00:33:45,690 --> 00:33:47,608
it has to gothrough the Justice Department.
511
00:33:49,068 --> 00:33:53,072
What's known as the Asset Forfeiture and Money Laundering Section of Justice.
512
00:33:55,491 --> 00:33:59,829
This prosecutor in West Virginia, according to these documents,
513
00:33:59,912 --> 00:34:02,206
was prepared to indict the bank.
514
00:34:02,290 --> 00:34:05,793
That would have been a huge step to take.
It would have been unprecedented.
515
00:34:07,795 --> 00:34:09,672
[Ihlenfeld] In early September of 2010,
516
00:34:09,756 --> 00:34:12,759
I was told that I needed to go to Washington, D.C.,
517
00:34:12,842 --> 00:34:14,969
to meet with Lanny Breuer,
518
00:34:15,053 --> 00:34:17,096
who was the Assistant Attorney General
519
00:34:17,180 --> 00:34:19,766
in charge of the Criminal Division of the Department of Justice,
520
00:34:19,849 --> 00:34:21,893
and also Loretta Lynch, who at the time
521
00:34:21,976 --> 00:34:25,188
was the United States Attorney for the Eastern District of New York.
522
00:34:26,647 --> 00:34:28,024
At the conclusion of the meeting,
523
00:34:28,107 --> 00:34:32,737
I received a call a few days later from Assistant Attorney General Breuer
524
00:34:32,820 --> 00:34:34,572
asking me to stand down.
525
00:34:35,782 --> 00:34:37,784
And I told him I couldn't do that.
526
00:34:37,867 --> 00:34:42,163
We had worked too long. We had developed some really important information.
527
00:34:42,789 --> 00:34:46,542
This was a case against one of the world's largest banks,
528
00:34:46,626 --> 00:34:49,045
and we just wanted to make sure that
529
00:34:49,128 --> 00:34:52,173
if there was an individual who should be
held accountable, he or she was.
530
00:34:52,256 --> 00:34:57,095
And that if the bank should be held
accountable through a guilty plea,
531
00:34:57,178 --> 00:35:01,015
which might cause its charter to be pulled
in the United States,
532
00:35:01,099 --> 00:35:03,142
that we should see it all the way through.
533
00:35:04,393 --> 00:35:06,729
But he asked me to step aside.
534
00:35:06,813 --> 00:35:11,818
He said that we could still continueto investigate Dr. Adams and his wife,
535
00:35:11,901 --> 00:35:16,072
but that we should stand down
from looking at HSBC.
536
00:35:22,620 --> 00:35:27,250
Good afternoon and thank you for coming.
537
00:35:27,333 --> 00:35:29,752
[Taibbi] I remember exactly that day.
538
00:35:30,336 --> 00:35:32,588
I was home in Jersey City.
539
00:35:32,672 --> 00:35:35,633
I had a lot of friends
who work on Wall Street.
540
00:35:35,716 --> 00:35:39,846
We had been kind of waiting
for the settlement to come down
541
00:35:39,929 --> 00:35:43,141
and most of us expected
that it would be pretty rough.
542
00:35:43,224 --> 00:35:48,312
We are here today to announce the filing
of criminal charges against HSBC Bank,
543
00:35:48,396 --> 00:35:54,277
both its US entity, HSBC US,and the parent HSBC Group,
544
00:35:54,360 --> 00:35:56,904
for its sustained and systemic failure
545
00:35:56,988 --> 00:35:59,699
to guard against the corruption
of our financial system
546
00:35:59,782 --> 00:36:04,871
by drug traffickers and other criminals
and for evading US sanctions law.
547
00:36:04,954 --> 00:36:09,083
And HSBC was the one
we were all looking at, saying,
548
00:36:09,167 --> 00:36:11,502
"That's the one
where they have to go to trial.
549
00:36:12,128 --> 00:36:15,548
They have to take these people and they have to put somebody away for it."
550
00:36:15,631 --> 00:36:20,720
Because HSBC was something that you could understand in one sentence.
551
00:36:20,803 --> 00:36:24,974
Rich bankers laundering
$800 million dollars
552
00:36:25,057 --> 00:36:30,229
for evil drug gangs and narco terrorists
who chop people's heads off.
553
00:36:30,313 --> 00:36:33,691
HSBC is being held accountable
554
00:36:33,774 --> 00:36:37,945
for stunning, stunning failures
of oversight and worse.
555
00:36:38,029 --> 00:36:42,450
Even prosecutors
that I was talking to at the time,
556
00:36:42,533 --> 00:36:46,913
law enforcement sources,
they thought that if ever there was a time
557
00:36:46,996 --> 00:36:51,250
you indict a bank for money laundering,
this is it.
558
00:36:51,334 --> 00:36:56,923
HSBC has admitted its guilt
to the four-count information filed today,
559
00:36:57,381 --> 00:37:00,885
which sets forth two violations of the Bank Secrecy Act,
560
00:37:00,968 --> 00:37:04,680
a violation of the International Emergency Economic Powers Act,
561
00:37:04,764 --> 00:37:09,185
or IEPA, and a violation of the Trading with the Enemy Act.
562
00:37:09,268 --> 00:37:11,938
As part of its resolution of these charges,
563
00:37:12,021 --> 00:37:17,818
HSBC has agreed to forfeit $1.256 billion.
564
00:37:18,611 --> 00:37:23,741
They have also agreed
to pay civil penalties of $665 million.
565
00:37:25,576 --> 00:37:27,495
[Keefe] A deal was worked out.
566
00:37:28,120 --> 00:37:31,290
They paid a fine of $1.9 billion.
567
00:37:31,374 --> 00:37:34,877
That's five weeks' profit for HSBC.
568
00:37:34,961 --> 00:37:39,298
We thought, I guess naively,
that this was gonna be different.
569
00:37:39,382 --> 00:37:41,300
But it wasn't different.
It was exactly the same.
570
00:37:41,384 --> 00:37:45,096
What we ended up with was
a deferred prosecution agreement.
571
00:37:45,179 --> 00:37:48,891
[reporter] A deferred prosecutionagreement with HSBC,
572
00:37:48,975 --> 00:37:51,727
in effect meaning there will be no prosecution
573
00:37:51,811 --> 00:37:53,813
of the bank or its top executives,
574
00:37:53,896 --> 00:37:57,817
despite more than a decade of dealing with criminals and terrorists.
575
00:37:57,900 --> 00:38:00,778
HSBC has engaged and agreed
576
00:38:00,861 --> 00:38:06,200
to partially defer bonus compensation
for its most senior executives...
577
00:38:06,284 --> 00:38:11,247
A portion of the bonuses of some
of the senior executives was withheld.
578
00:38:11,330 --> 00:38:12,456
Just a portion.
579
00:38:12,540 --> 00:38:16,335
They have agreed to a five-year term
under this deferred prosecution agreement,
580
00:38:16,419 --> 00:38:20,673
with a corporate monitor and a requirement
of ongoing cooperation.
581
00:38:20,756 --> 00:38:24,885
This was not your typical
Northern West Virginia press conference.
582
00:38:24,969 --> 00:38:28,431
It was in Brooklyn.
You had reporters from major networks
583
00:38:28,514 --> 00:38:32,727
that attended because of the scope of the
case. And there were some good questions.
584
00:38:32,810 --> 00:38:36,564
In London, analysts are saying
the bank can easily absorb this cost.
585
00:38:36,647 --> 00:38:39,442
They made profits of $38 billion
the last two years.
586
00:38:39,525 --> 00:38:41,861
-Is it really that significant?
-Well, I think...
587
00:38:41,944 --> 00:38:43,362
Are we really
holding the bank accountable?
588
00:38:43,446 --> 00:38:46,282
Look, our goal here
is not to bring HSBC down.
589
00:38:46,365 --> 00:38:50,119
It's not to cause a systemic effect
on the economy.
590
00:38:50,202 --> 00:38:53,581
It's not for people
to lose thousands of jobs. It's to--
591
00:38:53,664 --> 00:38:55,166
They don't deserve that?
592
00:38:55,249 --> 00:38:58,002
Ultimately, no individual was charged
with any crimes,
593
00:38:58,085 --> 00:39:01,005
and no individual was fined
any amount of money.
594
00:39:01,088 --> 00:39:04,133
Here's this big bank,
that was essentially let off the hook.
595
00:39:04,216 --> 00:39:06,969
It was fined, but it's a speeding ticket.
596
00:39:07,053 --> 00:39:10,097
[reporter] If the Sinaloa cartel had
agreed to not do any more drug smuggling,
597
00:39:10,181 --> 00:39:12,558
would you also defer prosecution
in their case?
598
00:39:12,641 --> 00:39:14,810
Well, I think
that's a little bit of hyperbole.
599
00:39:14,894 --> 00:39:16,562
Look, my...
600
00:39:16,645 --> 00:39:18,272
When you look at this,
601
00:39:18,356 --> 00:39:20,775
one of the things
we also have to think about,
602
00:39:20,858 --> 00:39:24,904
frankly, is who are
the innocent people here?
603
00:39:29,658 --> 00:39:33,662
The connection between a bank
who was by its own admission
604
00:39:33,746 --> 00:39:37,792
the preferred financial institution
of the drug cartels,
605
00:39:37,875 --> 00:39:41,796
the most brutal organizationson Earth, okay?
606
00:39:41,879 --> 00:39:44,507
That connection between doing that conduct
607
00:39:44,590 --> 00:39:50,638
and the over 100,000 massacred in Mexico really has to be made.
608
00:39:52,348 --> 00:39:55,935
We found it hard to believe,
as an investigative team,
609
00:39:56,018 --> 00:39:59,730
that upper-level management was unaware
of what was happening.
610
00:40:00,689 --> 00:40:03,984
It was our theory that the bank knew what was happening,
611
00:40:04,068 --> 00:40:07,446
that it was good for business, that it was good for the bottom line,
612
00:40:07,530 --> 00:40:09,990
but that it didn't want it to cease,
613
00:40:10,074 --> 00:40:13,536
because that would then affect
its profit margins.
614
00:40:15,496 --> 00:40:18,124
[Bean] Eric Holder wasthe Attorney General at the time.
615
00:40:18,207 --> 00:40:22,420
And what we found out is that the regulator in the United Kingdom
616
00:40:22,503 --> 00:40:27,550
really pressed the case
and said, "Please don't indict HSBC
617
00:40:27,633 --> 00:40:29,885
because it's going to have
a huge financial impact."
618
00:40:30,845 --> 00:40:32,805
Eric Holder bought that argument.
619
00:40:34,265 --> 00:40:35,599
You think about it,
620
00:40:35,683 --> 00:40:38,185
who's doing the regulation,
who's making these cases?
621
00:40:38,269 --> 00:40:41,147
You think about Eric Holder
and Lanny Breuer,
622
00:40:41,230 --> 00:40:43,983
again they both came
from the same big law firm,
623
00:40:44,066 --> 00:40:45,818
Covington and Burling in Washington
624
00:40:45,901 --> 00:40:48,362
which represented almost all the too-big-to-fail banks.
625
00:40:48,446 --> 00:40:50,156
They know that when they leave,
626
00:40:50,239 --> 00:40:52,074
the instant they go back to the private sector,
627
00:40:52,158 --> 00:40:56,579
they're going to get a partnership worth three, four, five million dollars a year.
628
00:40:56,662 --> 00:41:01,625
But if you're too rough on your clientele,
that partnership might not be there.
629
00:41:01,709 --> 00:41:06,297
So there's a powerful incentive
for you to behave a certain way
630
00:41:06,380 --> 00:41:07,965
towards the people you're regulating.
631
00:41:09,049 --> 00:41:12,261
[Wolf] The Justice Department went to OCC,and they asked,
632
00:41:12,344 --> 00:41:15,264
"What's gonna happen? Can we do this?"
633
00:41:16,182 --> 00:41:18,684
You know, I think they wanted cover,
634
00:41:18,767 --> 00:41:24,148
so that if they do this, and there's a calamity, it's not on them.
635
00:41:24,231 --> 00:41:27,401
But nobody was willing
to give them comfort with doing that.
636
00:41:27,485 --> 00:41:29,820
And I think, you know, Lanny Breuer,
637
00:41:29,904 --> 00:41:31,989
the head of the criminal division,
had to make a choice.
638
00:41:32,072 --> 00:41:36,452
Because we had a financial crisis we were
still climbing out of in this country.
639
00:41:36,535 --> 00:41:43,083
And frankly, nobody knew what would be the
consequence if you do this, if you indict.
640
00:41:43,959 --> 00:41:45,836
[Taibbi] When the HSBC settlementcame down,
641
00:41:45,920 --> 00:41:48,631
there were editorialsin financial newspapers that said,
642
00:41:48,714 --> 00:41:50,633
"This looks bad for everybody."
643
00:41:51,509 --> 00:41:55,846
And that was a major signal that it was a soft-touch settlement...
644
00:41:59,642 --> 00:42:03,938
that even the financial press thought
it was a giveaway.
645
00:42:04,021 --> 00:42:08,192
You'll likely go to jail
if you're caught with an ounce of cocaine.
646
00:42:08,275 --> 00:42:12,446
If it happens repeatedly, you may
go to jail for the rest of your life.
647
00:42:12,530 --> 00:42:16,450
But evidently,
if you launder nearly a billion dollars
648
00:42:16,534 --> 00:42:21,121
for drug cartels and violate
our international sanctions,
649
00:42:21,205 --> 00:42:24,792
your company pays a fine and you go home
and sleep in your own bed at night.
650
00:42:24,875 --> 00:42:27,545
Every single individual
associated with this.
651
00:42:27,628 --> 00:42:30,130
I think that's fundamentally wrong.
652
00:42:30,214 --> 00:42:34,885
That's not equal justice under law.
That is not accountability.
653
00:42:34,969 --> 00:42:37,137
You don't think the bank got off easy?
654
00:42:37,221 --> 00:42:39,807
No, and I don't think
the bank thinks it got off easy.
655
00:42:39,890 --> 00:42:43,769
I really don't.
I don't think the bank got off easy, no.
656
00:42:43,852 --> 00:42:45,229
[journalists murmuring]
657
00:42:45,312 --> 00:42:48,524
[Elias] A part of the deferred prosecutionagreement process
658
00:42:48,607 --> 00:42:52,528
is there's going to be some sort of admission by the company
659
00:42:52,611 --> 00:42:54,613
that they've done something wrong.
660
00:42:55,656 --> 00:42:59,285
You have to understand,
those are admissions that come out
661
00:42:59,368 --> 00:43:03,330
after an army of lawyers for HSBC
662
00:43:03,914 --> 00:43:06,709
negotiate as hard as they can with the Department
663
00:43:06,792 --> 00:43:10,129
to get the languageas watered down as they can.
664
00:43:11,046 --> 00:43:13,632
I know from experience that's the process.
665
00:43:20,889 --> 00:43:23,350
[Kristi Jacobson] Yeah, I think this one.
666
00:43:27,438 --> 00:43:28,606
Go ahead with the first one.
667
00:43:30,566 --> 00:43:31,984
I'll hold it up more.
668
00:43:33,819 --> 00:43:36,697
"The following statement of facts
is incorporated by reference
669
00:43:36,780 --> 00:43:39,742
as part of
the deferred prosecution agreement."
670
00:43:39,825 --> 00:43:44,538
"HSBC Bank USA and HSBC Holdings
hereby agree and stipulate
671
00:43:44,622 --> 00:43:47,082
that the following information
is true and accurate."
672
00:43:47,166 --> 00:43:53,130
"HSBC Bank USA
and HSBC Holdings accept..."
673
00:43:53,213 --> 00:43:56,133
"...that they are responsible for the acts
of their respective officers,
674
00:43:56,216 --> 00:44:00,929
directors, employees and agents as
set forth in this prosecution agreement."
675
00:44:01,013 --> 00:44:03,557
"If this matter were to proceed to trial,
676
00:44:03,641 --> 00:44:06,143
the department would prove
beyond a reasonable doubt
677
00:44:06,226 --> 00:44:09,897
by admissible evidence
the facts alleged below
678
00:44:09,980 --> 00:44:14,109
and set forth in the criminal information
attached to this agreement."
679
00:44:14,193 --> 00:44:18,405
"From 2006 to 2010, HSBC Bank USA
680
00:44:18,489 --> 00:44:21,659
violated the BSA
and its implementing regulations."
681
00:44:21,742 --> 00:44:25,371
"Specifically, HSBC Bank USA ignored
the money laundering risks
682
00:44:25,454 --> 00:44:28,832
associated with doing business
with certain Mexican customers
683
00:44:28,916 --> 00:44:31,835
and failed to implement a BSA/AML program
684
00:44:31,919 --> 00:44:34,505
that was adequate
to monitor suspicious transactions."
685
00:44:34,588 --> 00:44:37,466
"As a result of these concurrent
AML failures,
686
00:44:37,549 --> 00:44:40,803
at least $881 million
in drug trafficking proceeds..."
687
00:44:40,886 --> 00:44:44,390
"...including proceeds of drug trafficking
by the Sinaloa cartel in Mexico,
688
00:44:44,473 --> 00:44:46,975
and the Norte del Valle cartel
in Colombia..."
689
00:44:47,059 --> 00:44:51,313
"...were laundered through HSBC Bank USA
without being detected."
690
00:44:51,397 --> 00:44:54,108
[Stern] "From at least 2000 to 2006,
691
00:44:54,191 --> 00:44:57,277
HSBC group knowingly and willfully engaged
692
00:44:57,361 --> 00:45:00,114
in conduct and practices
outside the United States
693
00:45:00,197 --> 00:45:05,744
that caused HSBC Bank and other financial
institutions located in the United States
694
00:45:05,828 --> 00:45:09,498
to process payments
in violation of US sanctions.
695
00:45:09,581 --> 00:45:11,208
To hide these transactions,
696
00:45:11,291 --> 00:45:14,753
HSBC Group affiliates altered and routed
payment messages
697
00:45:14,837 --> 00:45:18,632
in a manner that ensured that payments
involving sanctioned countries
698
00:45:18,715 --> 00:45:21,093
and entities cleared without difficulty
699
00:45:21,176 --> 00:45:24,805
through HSBC Bank, USA,
in New York County and elsewhere."
700
00:45:29,560 --> 00:45:31,019
See, they admitted to everything.
701
00:45:34,606 --> 00:45:38,193
It's incredible. It's, um...
702
00:45:39,945 --> 00:45:41,447
It's an admission.
703
00:45:45,701 --> 00:45:48,620
It's shocking for me to read that.
[chuckles] Yeah.
704
00:45:48,704 --> 00:45:50,247
[Jacobson] How does it make you feel?
705
00:45:51,498 --> 00:45:57,463
We talked at the beginning about the fact
that here in West Virginia, we've got...
706
00:45:57,546 --> 00:46:01,633
We might be at the epicenter of
the drug problem in the entire country.
707
00:46:01,717 --> 00:46:05,220
We lead the nation in drug overdose deaths
on a per capita basis.
708
00:46:05,304 --> 00:46:11,727
And so to hear that there's a bank
that is enabling the Sinaloa drug cartel
709
00:46:11,810 --> 00:46:15,189
to move money around
so it could continue to operate,
710
00:46:15,272 --> 00:46:21,445
and continue to push heroin
from Mexico to Appalachia,
711
00:46:21,528 --> 00:46:26,575
to northern West Virginia,
makes it all the more upsetting,
712
00:46:26,658 --> 00:46:28,827
because the government had an opportunity
713
00:46:28,911 --> 00:46:34,124
to do a better job of
addressing this conduct, and it failed.
714
00:46:40,339 --> 00:46:44,968
[Hernández] This conclusion of the US government for me is just another proof
715
00:46:45,052 --> 00:46:50,849
that all this war against drug cartels is just fake. It's not real.
716
00:46:51,725 --> 00:46:54,853
Because if really they want to fight against them,
717
00:46:54,937 --> 00:46:59,733
they have to fight against the banks
that help them to move the money.
718
00:47:03,987 --> 00:47:05,364
[Wolf] Was justice done here?
719
00:47:08,158 --> 00:47:09,868
That's a hard question to answer.
720
00:47:11,495 --> 00:47:13,455
[Taibbi] We would never allowthis kind of thing
721
00:47:13,539 --> 00:47:15,123
if it was a different kind of person.
722
00:47:16,875 --> 00:47:18,210
But because they're white people
723
00:47:18,293 --> 00:47:22,798
who drive nice cars
and live in Connecticut or whatever it is,
724
00:47:22,881 --> 00:47:25,551
they get off. That's the reality.
725
00:47:26,760 --> 00:47:30,055
It's a completely different process.
726
00:47:30,138 --> 00:47:34,434
You wouldn't arrest a drug dealer and then go into a back room
727
00:47:34,518 --> 00:47:37,813
and craft a settlement that allowed the person to retain
728
00:47:37,896 --> 00:47:42,109
his home, his family, his lifestyle, his cars, all those things.
729
00:47:42,192 --> 00:47:43,735
But that's what they did with this case.
730
00:47:45,279 --> 00:47:48,198
And it formalized what everybody already knew,
731
00:47:48,282 --> 00:47:52,202
which was that when these companies become so systemically important
732
00:47:52,286 --> 00:47:54,580
that prosecuting even the individuals in them
733
00:47:54,663 --> 00:47:59,084
threatens to disrupt the world economy,
then they're too big to jail.
734
00:47:59,167 --> 00:48:02,170
They're a member of a class
that is not jailable.
735
00:48:52,012 --> 00:48:54,014
[music playing]
69763
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