Tuesday, July 17, 2012


Most compliance officers are fully aware that us regulators have the power to impose the "death penalty" (charter or license revocation), upon financial institutions, for egregious conduct. They also know that no US bank has ever been hit with that sanction. Perhaps now that time has come, as one compliance horror story after another unfolds in the HSBC scandal.

When a bank, over a period of a decade, launders not only criminal proceeds, but facilitates terrorist financing, this constitutes what lawyers call willful, wanton and reckless conduct. Such behaviour deserves a punitive response, so that justice may be done. I did see that one of the US Senators involved in the Congressional investigation mention loss of charter as a remedy, but do US regulators have the intestinal fortitude to take such drastic action ?

So long as the directors of the world's largest banks know that they will receive only a financial slap on the wrist, and a required upgrading of their compliance departments, the system of pandering to high net-worth clients, who are an important profit centre for the bank, will continue unabated. Maybe it is high time to nail up one of the biggest violators, so that their competitors will take note.

There are a number of different HSBC corporate entities operating in the United States. Should a few of them have their charters revoked ? What do you think ?

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.