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@ pam
2025-01-03 16:27:58
I was reading this book ***Too Big to Jail*** by Chris Blackhurst that talks about one of the biggest bank scandals of the century - billions of money laundered through HSBC for the Sinaloa cartel, the world’s largest drug cartel that supplies 25% of illegal drugs to the US. HSBC walked away with a $1.9 billion fine in 2012 and no one was charged or imprisoned. Meanwhile, Joaquín "El Chapo" Guzmán, the cartel’s leader, was sentenced to life in prison + 30 years in the US, with $12.6 billion of his assets forfeited.
Interestingly, HSBC’s dark history dates back to over 150 years. I first read in John Potash’s ***Drugs as Weapons Against Us*** about how HSBC was established to serve the opium trade. Chris Blackhurst expands on this story. HSBC’s founder, Thomas Sutherland, had no banking experience but leveraged his trade expertise and British imperial backing to lead a thriving merchant business alongside opium business exporting to China. When China resisted, the British Empire doubled down and escalated tensions, resulting in the Opium Wars, forcing China to accept opium trade and China ceding Hong Kong to Britain for a hundred years
With trade comes the need for fund transfer, hence Sunderland founded HSBC in Hong Kong, to handle foreign transactions. Ironically, 150 years later, HSBC was caught laundering funds for illegal drugs for the Sinaloa cartel between 2003 and 2010. During this period, HSBC's chairman, Stephen Green, an Anglican priest who authored Ethical Capitalism, was never charged. Instead, he became Lord Green and served as the UK’s Minister of State for Trade and Investment.
Chris Blackhurst aptly summarizes this hypocrisy - "HSBC, the fueller of evil, holds its customers to strict standards, yet it enabled cartels to launder metric tonnes of cash."
**Other banks and their crimes**
The 1MDB scandal:
Billions was embezzled from the Malaysian sovereign wealth fund in the 1MDB scandal. Those convicted were former Prime Minister Najib Razak who was imprisoned, but mastermind behind it Jho Low remains at large. Goldman Sachs, Deutsche Bank, and AmBank were implicated. Goldman Sachs paid a $2.9 billion fine, and Roger Ng was sentenced to 10 years in prison.Tim Lessner pleaded guilty and cooperated with the authorities.
Wells Fargo Fake Accounts Scandal:
From 2002 to 2016, Wells Fargo employees opened millions of fake accounts in customer’s names without their consent to meet aggressive sales quotas.
Libor Interest Rate Rigging:
Major banks, including Barclays, UBS, Citibank and JPMorgan Chase, colluded to manipulate the London Interbank Offered Rate (Libor) which is a global benchmark for interest rates. This impacted trillions of dollars in global financial products.
I'm sure there is more to the list based on what we know and don't know.
Every time Bitcoin gets criticized for “money laundering,” I think of these scandals and the roles that corrupted governments play. Millions of people have suffered from the systemic corruption of traditional finance and they deserve financial liberation.
A 2020 report from Chainalysis indicated that illicit transactions (including money laundering, ransomware payments, and fraud) accounted for only less than 1% of all Bitcoin transactions, which is a speck compared to the scale of corruption in the traditional financial system. The United Nations Office on Drugs and Crime (UNODC) estimates that between 2% and 5% of global GDP , which accounts for trillions of dollars, is laundered each year through the traditional financial systems.
Chris Blackhurst was right when he said those who are “too big to jail” tend to get away.