What Happens When Our Banks are too Big to Fail and Bankers are too Important to Jail?

© Josh Sager – December 2012


In December 2011, the Justice Department announced the resolution to an investigation of one of the largest money laundering investigations to have occurred in United States history. During this investigation, the DOJ determined that the accused organization had knowingly and deliberately engaged in laundering billions of dollars for groups including, but not limited to, Iran, Al Qaida, Mexican drug cartels and the Russian Mafia. Despite the clear evidence to support this pattern of unlawful conduct, the DOJ has settled with the offending party by forcing them to pay back less than 3 months of their profits—nobody is going to jail and the offending organization will be allowed to keep most of the money made through its crimes.

I have not yet mentioned the name or station of the money-laundering group for one simple reason: I want you, the reader, to look at this situation by its merits and think about how absurd it is before I get into specifics. An organization made an immense profit by breaking American and international laws, was caught red handed, and was let off with a slap on the wrist. They facilitated terrorists and drug cartels, yet not only escaped punishment, but also were allowed to keep their ill-gotten gains. Just based upon the description of these crimes, one would think that I would be describing some shadowy Bond villain (actually, this was the exact enterprise of Casino Royale’s villain Le Chiffre) but, in reality, these crimes were committed by one of the largest financial institutions on earth.

The organization which committed these crimes was the major British bank HSBC (with its American subsidiaries) and the reason why they evaded consequences for their criminal conduct was that the US government was afraid to consequence powerful banking interests. In refusing to take on a bank solely due to the fact that they have economic power, the United States DOJ illustrated our two tiered justice system and has given other banks the green light to commit crimes with impunity.


Starting in the early 2000’s (possibly as late as 2006), HSBC began willfully neglecting its oversight procedures and allowing illegal transactions to go through their organization in the scale of billions of dollars. Without going into excessive detail, HSBC’s criminal conduct was that it allowed restricted entities (ex. rogue nations or drug cartels) to deposit lump sums of money into accounts and to buy physical assets with this money. By filtering illegally-obtained cash through HSBC, drug dealers and terrorists were able to use their dirty money at a decreased risk of exposure and to further their criminal enterprises.

There is no question over whether or not HSBC is guilty in this case, as everybody can agree that the bank committed these crimes. According to the DOJ’s official press release about the investigation, “HSBC’s willful flouting of U.S. sanctions laws and regulations resulted in the processing of hundreds of millions of dollars in OFAC-prohibited transactions.” In their press releases surrounding the settlement, HSBC admitted to its criminal behavior and said “We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again.” While it may be that HSBC officials feel bad about working with terrorists and criminals, the fact remains that they did so and should be prosecuted—an apology does nothing to mitigate criminal conduct prosecutions.

This situation is a terrible miscarriage of justice and it illustrates just how much money and power have corrupted our government. HSBC’s criminal conduct exists at the intersection of drugs and terrorism—two of the things which the United States is currently “at war with”—thus one would think that the United States government would punish the bankers involved to the fullest extent of the law. Unfortunately, the money and power of the HSBC bankers has allowed them to intimidate the government into not prosecuting them for their crimes. The fear that such prosecutions would destabilize HSBC (and thus the world economic markets) led the DOJ to back down and let those with power get away with crimes that would send a less wealthy person to jail forever.

In other cases involving drug enterprises and terrorism (ones not involving powerful banking interests), the US government has dedicated untold sums of money and resources towards consequencing everybody involved: Drug dealers and low-level money launderers are ruthlessly pursued and given draconian sentences for their part in the sale of illegal narcotics. Those who are suspected of committing or funding terrorism are detained, denied trial, and sometimes even summarily executed via drone strike. Regardless of whether or not one supports these reactions to terrorism and drug dealing, the fact remains that the only differences between those at HSBC and the other offenders are that those at HCBC committed their crimes on a global scale and wore suits while perpetrating their crimes.

The law is supposed to be applied equally, regardless of money, power or influence, thus this disparity demonstrates a truly despicable two-tiered justice standard—those with money are allowed to walk away from their crimes while everybody else is held to account for their actions by the justice system. If you hold a dime bag for a friend and are caught, you may spend a decade in jail, but if a banker is caught holding a billion dollars for a drug cartel, they simply need to pay back some of their quarterly profits. This disparity is an affront to the rule of law and simply sets up a situation where those with power are encouraged to break the law.

In addition to being grossly unfair, this situation begs the question, “what happens when those at the banks realize that they are above the law?” If HSBC can get away from dealing with terrorists and drug cartels with no consequences and a healthy profit, what could powerful bankers possibly be convicted for? By sending bankers the clear message that they are above the laws which govern the rest of us, the DOJ has given them the green light to do anything that they want to do. If they want to break the law, bankers simply need to do so on a scale which would destroy their banking institution if they were properly consequenced—something that the government is too afraid to do—and take the paltry deal which they are offered to sweep the story under the rug.

3 thoughts on “What Happens When Our Banks are too Big to Fail and Bankers are too Important to Jail?

  1. Neither link explicitly states that HSBC had any relationship with either Al Quaida or the Russian Mafia. Please post links to credible sources with this information. The absence of cited material to credible sources with this information undermines the credibility of your blog. I appreciate what you are trying to do, but David must be much more rigorous with his sources if he is going to beat Goliath. Otherwise, good piece and keep up the fight.


    • You make a fair point in saying that I don’t link to primary sources that confirm the fraud, but the evidence is clear. As I say in the piece, not even HSBC denies the facts of the case and it has been established that they broke the law. That said, I respect your skepticism.

      If you want reputable links supporting the accusations, here is the link to the Senatorial Permanent Sub-Committee on Investigations’s findings in their investigation: http://www.hsgac.senate.gov/subcommittees/investigations/media/hsbc-exposed-us-finacial-system-to-money-laundering-drug-terrorist-financing-risks


      • It’s not a fair point, and honestly, it’s not skepticism. I don’t doubt for a second that financial institutions and even the United States Government blatantly fund and support drug cartels and terrorist organizations (both have been proven and both have been admitted to by the respective institutions at different points in time). My issue is that since I want the public to know and become more aware of the fact that our governments and financial institutions fund and support terrorism and the drug trade (effectively creating the enemies in the “wars” we are ostensibly fighting), meaning that we actually fund the enemies since we fund the organizations funding the organizations the former organizations are fighting, I want the people telling the truth to the public to make sure there are no holes in their arguments because those who support the status quo or are true doubters of the duplicity of their beloved institutions will use any and every chance they get to discredit the truth and keep the public believing that the government and the wealthy are friends and not the most heinous of enemies. Of course banks and governments fund the drug war and the war on terror; I just don’t want those who profit from funding these wars any chance to discredit those who are telling the truth.


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