What broader consequences stem from HSBC’s involvement in laundering money for Iran, drug networks, and other illicit groups?
Payments
Asked by Question Bot07/Jul/20141 answer
1 Answer
F
Faisal Khan
Answered 07/Jul/2014
The implications for the bank are quite serious in various parts of the world where it is regulated. It has the potential (though unlikely) to lose its banking license, but more probably is that it will be slapped with heavy fines and more detailed reporting that the bank would now have to do both internally and externally to the financial regulators.
Barring the labels in the reports, their exists a pervasively polluted culture in almost all the banks. When Julius Baer does private banking it is okay. When regulators found out money has exited the country for purposes of tax avoidance etc. the labels applied can be nasty at best.
All banks try to operate within the framework as laid out by their regulator. However, a lot gets lost in translation as to what is legal or not. To teach banks a lesson, the financial regulator can come down pretty hard on banks. Think BCCI in the early 90s a very prominent and thriving bank, shuttered almost overnight and out of business. HSBC is too large to be shut down and a lot is at stake, especially in these fragile economic times.
What is clearly at fault here are the fund managers, wealth managers of HSBC who channel money. HSBC's Wealth Management arm is one of the worlds largest and most respected. Over-zealous in achieving targets, Managers seek shortcuts (which sometimes are illegal) and this becomes the inherent culture within the bank (as clearly it has within HSBC).
There would most likely be a a few high-level jobs that would be axed because of this fine. Shareholders will demand someone takes responsibility for this. Since we are talking of a significant fine, the bank may decide to close/sell, forgo certain markets and products.
Internal policies by both their Internal Audit and External Auditors would be check, rechecked and rechecked again. Do expect more stringent checks to be placed.
All that than be expected is that the bank understands (very clearly) the rules and confinement of the geographic area they are operating in, for which the bank would implement a very thorough awareness and training program for their welath management arm, as well as making any cross-border payments subjects to more scrutiny.
Barring the labels in the reports, their exists a pervasively polluted culture in almost all the banks. When Julius Baer does private banking it is okay. When regulators found out money has exited the country for purposes of tax avoidance etc. the labels applied can be nasty at best.
All banks try to operate within the framework as laid out by their regulator. However, a lot gets lost in translation as to what is legal or not. To teach banks a lesson, the financial regulator can come down pretty hard on banks. Think BCCI in the early 90s a very prominent and thriving bank, shuttered almost overnight and out of business. HSBC is too large to be shut down and a lot is at stake, especially in these fragile economic times.
What is clearly at fault here are the fund managers, wealth managers of HSBC who channel money. HSBC's Wealth Management arm is one of the worlds largest and most respected. Over-zealous in achieving targets, Managers seek shortcuts (which sometimes are illegal) and this becomes the inherent culture within the bank (as clearly it has within HSBC).
There would most likely be a a few high-level jobs that would be axed because of this fine. Shareholders will demand someone takes responsibility for this. Since we are talking of a significant fine, the bank may decide to close/sell, forgo certain markets and products.
Internal policies by both their Internal Audit and External Auditors would be check, rechecked and rechecked again. Do expect more stringent checks to be placed.
All that than be expected is that the bank understands (very clearly) the rules and confinement of the geographic area they are operating in, for which the bank would implement a very thorough awareness and training program for their welath management arm, as well as making any cross-border payments subjects to more scrutiny.