Legal (U.S.): After the Liberty Reserve arrests, how did their violations differ from the accusations made against HSBC?
Payments
Asked by Question Bot05/Jun/20151 answer
1 Answer
F
Faisal Khan
Answered 05/Jun/2015
Liberty Reserve was/is being punished, because the US Financial Regulators wish to do so. There are other businesses equally that could be punished, but are not. Strictly speaking if you were to look at say JP Morgan Chase's part/role in the HSBC fiasco, the transactions from Saudi Arabia were routed through JP Morgan Chase's New York Bank branch, yet they were not chided in any manner.
Typically, when an MSB or a non-registered MSB does wrong, the Federal and State regulators do build a case, confront the party, and then try to rectify it, ensuring the player comes into compliance. There are 100s of documented cases as such, where from small time money exchangers to mid-and-large sized financial institutions may have done wrong and were then brought into the compliance net and slapped with a fine.
So lets be very clear about one thing: Liberty Reserve did break the law, continuously. A lot many times. There is no denying that. What I do object to is the manner in which they were closed down. It is not as if the regulators did not know about LR's activities and what they were doing. Are regulators now standing on the sidelines to see someone break a Dollar threshold before they move in? Seem like it. LR could have been brought into the compliance and legal net a long time ago. They could have been shut out many years ago. Yet, I personally think the regulators were salivating until the fish gained more in size.
LR's activities are nothing new. They have been around for years. Why did not one single regulator put a stop to them then is a question that begs to be answered?
The US regulators, which are needless to say backed and favoured by the larger financial institutions and their lobbyists, do not want to see any organisation that is not legally sanctioned with their blessing to blossom. I am pretty sure, Bitcoin is the next target. The US system will make it almost impossible to Americans to trade on the Bitcoin exchanges, making it illegal to use US issued or US based financial instruments or legal tender to buy/sell Bitcoins.
HSBC got away due to many factors (read my other Quora answer below), but they got the proverbial slap on the wrist, albeit an expensive one. The regulators waited out and amassed a large amount of wrongdoings and then confronted HSBC with it. HSBC which operates under the legal banking license had two options: pay up or fight. In the latter, it risked losing its license, and customers, so paying the fine was lesser of the two evils that confronted HSBC.
LR's prosecution and clamp-down efforts are different. Its been quite a few months, since the US regulators and AUSAs have clamped down on someone.
You can also read my answer on this issue at: Faisal Khan's answer to How can money laundering of $6 billion occur?
Typically, when an MSB or a non-registered MSB does wrong, the Federal and State regulators do build a case, confront the party, and then try to rectify it, ensuring the player comes into compliance. There are 100s of documented cases as such, where from small time money exchangers to mid-and-large sized financial institutions may have done wrong and were then brought into the compliance net and slapped with a fine.
So lets be very clear about one thing: Liberty Reserve did break the law, continuously. A lot many times. There is no denying that. What I do object to is the manner in which they were closed down. It is not as if the regulators did not know about LR's activities and what they were doing. Are regulators now standing on the sidelines to see someone break a Dollar threshold before they move in? Seem like it. LR could have been brought into the compliance and legal net a long time ago. They could have been shut out many years ago. Yet, I personally think the regulators were salivating until the fish gained more in size.
LR's activities are nothing new. They have been around for years. Why did not one single regulator put a stop to them then is a question that begs to be answered?
The US regulators, which are needless to say backed and favoured by the larger financial institutions and their lobbyists, do not want to see any organisation that is not legally sanctioned with their blessing to blossom. I am pretty sure, Bitcoin is the next target. The US system will make it almost impossible to Americans to trade on the Bitcoin exchanges, making it illegal to use US issued or US based financial instruments or legal tender to buy/sell Bitcoins.
HSBC got away due to many factors (read my other Quora answer below), but they got the proverbial slap on the wrist, albeit an expensive one. The regulators waited out and amassed a large amount of wrongdoings and then confronted HSBC with it. HSBC which operates under the legal banking license had two options: pay up or fight. In the latter, it risked losing its license, and customers, so paying the fine was lesser of the two evils that confronted HSBC.
LR's prosecution and clamp-down efforts are different. Its been quite a few months, since the US regulators and AUSAs have clamped down on someone.
You can also read my answer on this issue at: Faisal Khan's answer to How can money laundering of $6 billion occur?