New York’s top financial regulator slapped a “Panama Papers”-linked bank with a $180 million fine for anti-money laundering violations.
Mega Bank, a $103 billion Taiwanese bank with one New York office, ignored the risks associated with transactions involving Panama, a high-risk area for money laundering, the state Department of Financial Services said in a statement on Friday.
The bank had “suspicious” accounts that were formed with the help of Mossack Fonseca, the law firm at the center of the “Panama Papers” leak, which revealed companies and wealthy individuals who dodged taxes, the DFS said.
The bank had lax controls and relied on untrained personnel, including a chief compliance officer who wasn’t familiar with anti-money-laundering rules.
The federal government revealed Wednesday that its investigation into foreign buyers using high-end U.S. real estate as a means to launder money found that potentially illicit activity is behind a “significant” portion of the cash transactions in Manhattan and Miami, and plans to expand the investigation into several other areas.
Earlier this year, the Treasury Department’s Financial Crimes Enforcement Network stated that it was “concerned about illicit money” being used to buy luxury real estate, and planned to begin identifying and tracking the previously unknown buyers who used shell companies to hide their identities.
At the time, FinCEN issued a “Geographic Targeting Order” that required title insurance companies in Manhattan and Miami-Dade County to identify the actual person behind shell companies used to pay all cash for high-end residential real estate in those two areas.
In a call with reporters on Wednesday, a FinCEN official stated that more than 25% of transactions covered in the initial inquiry involved a “beneficial owner” that is also subject of a “suspicious activity report,” which is an indication of possible criminal activity.
On the heels of the DNC email leaks, Hillary Clinton‘s campaign manager, Robby Mook, pointed the finger squarely at the Russians and said that the emails were leaked to help elect Donald Trump. As a result, there has been much talk about Trump’s campaign and ties to Russia. Many Democrats are specifically bringing up the fact that Trump’s campaign manager, Paul Manafort, recently consulted for pro-Russian politicians in the Ukraine, including helping former Ukrainian Prime Minister Viktor Yanukovych (a Vladimir Putin ally).
LawNewz.com did some digging into those alleged ties, and discovered that for several years Manafort was also caught up in a lawsuit filed by former Ukranian Prime Minister Yulia Tymoshenko.She accused Manafort and others of funneling money into the United States to help pay Ukrainian prosecutors and supporters of Viktor Yanukovych who in 2010 narrowly defeated Tymoshenko to become Ukraine’s president. After four years of litigation, the lawsuit was dismissed in 2015 by a Manhattan federal judge. Attorneys denied Manafort had any involvement.
The lawsuit centers around what Tymoshenko called politically motivated prosecutions against her. Tymoshenko, who served as the first female Prime Minister from 2007 to 2010, faced criminal charges for alleged involvement with a gas import contract signed with Russia. She was ultimately released from prison in 2014 after a revision of the Ukranian criminal code that decriminalized the actions for which she was convicted. At around the same time, Yanukovych was ousted from power. She has long held that the prosecutions against her were unjust, corrupt and were motivated purely by politics.
In 2011, Tymoshenko filed a lawsuit in the U.S. District Court in the Southern District of New York against Ukranian industrialist Dmytro Firtash, and others for allegedly running a U.S. based racketeering enterprise which stood to benefit financially from her prosecution. One of the named defendants in the lawsuit is none of other than Paul Manafort.
The U.S. government asked a federal appeals court on Thursday to block the release of a report detailing how HSBC Holdings Plc is working to improve its money laundering controls after the British bank was fined $1.92 billion.
In a brief filed with the 2nd U.S. Circuit Court of Appeals, the U.S. Department of Justice sought to overturn an order issued earlier this year by U.S. District Judge John Gleeson to make a report by the bank’s outside monitor public.
“Public disclosure of the monitor’s report, even in redacted form, would hinder the monitor’s ability to supervise HSBC,” the government’s court filing said, adding that bank employees would be less likely to cooperate with the monitor if they knew their interactions could be released.
A spokesman for the Justice Department declined to comment. HSBC did not immediately respond to a request for comment.
The filing comes a week after U.S. congressional investigators criticized senior officials at the Department of Justice for overruling internal recommendations to criminally prosecute HSBC for money-laundering violations.
Instead, the government in 2012 fined HSBC and entered into a five-year deferred prosecution agreement that stipulated all charges would be dropped if the bank agreed to install an independent monitor to help improve compliance.
It’s about time!!!
WASHINGTON ― Rep. Maxine Waters (D-Calif.) sent a sharply worded letter to Attorney General Loretta Lynch on Friday, calling on the government’s top lawyer to rescind a drug money laundering settlement with HSBC and bring criminal charges against the British financial titan’s employees.
Under the standards of Beltway etiquette, it’s a provocative move for a Democratic congresswoman in a leadership position ― Waters is the ranking member of the powerful House Financial Services Committee ― to publicly challenge a sitting Democratic cabinet member. But Waters’ letter is particularly biting for another reason: Lynch was personally in charge of the HSBC investigation that infuriated financial reform advocates in December 2012, while she was U.S. Attorney for the Eastern District of New York.
“I have long criticized the apparent two-tiered American justice system that subjects low-level criminal offenders to harsh prison sentences that completely upend their lives and compromise their futures, while allowing the perpetrators of major financial crimes to be largely shielded from criminal prosecution,” Waters wrote Friday.
The HSBC deal, known technically as a deferred prosecution agreement or DPA, settled charges that the company laundered $881 million for the Sinaloa and Norte del Valle drug cartels and violated U.S. government sanctions against Iran, Libya, Sudan and other countries. The bank paid the feds $1.9 billion and no bankers were prosecuted. Waters wasn’t happy at the time, and needled then-Attorney General Eric Holder about the deal in 2013.
But roughly two years after Lynch finalized the deal, reports surfaced showing that an HSBC whistleblower had turned over information to the DOJ suggesting that the firm’s Swiss unit had engaged in massive tax evasion efforts. The documents reached the department during Lynch’s money laundering investigation, which never mentioned anything about tax evasion; Lynch said her office never saw the documents.
REPORT PREPARED BY THE REPUBLICAN STAFF OF THE
COMMITTEE ON FINANCIAL SERVICES, U.S. HOUSE OF REPRESENTATIVES
HON. JEB HENSARLING, CHAIRMAN
114TH CONGRESS, SECOND SESSION
JULY 11, 2016
In March 2013, the Committee on Financial Services (Committee) initiated a
review of the U.S. Department of Justiceâ€™s (DOJâ€™s) decision not to prosecute HSBC
Holdings Plc. and HSBC Bank USA N.A. (together with its affiliates, HSBC) or any
of its executives or employees for serious violations of U.S. anti-money laundering
(AML) and sanctions laws and related offenses. The Committeeâ€™s efforts to obtain
relevant documents from DOJ and the U.S. Department of the Treasury (Treasury)
were met with non-compliance, necessitating the issuance of subpoenas to both
agencies. Approximately three years after its initial inquiries, the Committee
finally obtained copies of internal Treasury records showing that DOJ has not been
forthright with Congress or the American people concerning its decision to decline
to prosecute HSBC. Specifically, these documents show that:
- Senior DOJ leadership, including Attorney General Holder, overruled an
internal recommendation by DOJâ€™s Asset Forfeiture and Money Laundering
Section to prosecute HSBC because of DOJ leadershipâ€™s concern that
prosecuting the bank would have serious adverse consequences on the
- Notwithstanding Attorney General Holderâ€™s personal demand that HSBC
agree to DOJâ€™s â€œtake-it-or-leave-itâ€ deferred prosecution agreement deal by
November 14, 2012, HSBC appears to have successfully negotiated with DOJ
for significant alterations to the DPAâ€™s terms in the weeks following the
Attorney Generalâ€™s deadline.
- DOJ and federal financial regulators were rushing at what one Treasury
official described as â€œalarming speedâ€ to complete their investigations and
enforcement actions involving HSBC in order to beat the New York
Department of Financial Services.
- In its haste to complete its enforcement action against HSBC, DOJ
transmitted settlement numbers to HSBC before consulting with Treasuryâ€™s
Office of Foreign Asset Control (OFAC) to ensure that the settlement amount
accurately reflected the full degree of HSBCâ€™s sanctions violations.
- The involvement of the United Kingdomâ€™s Financial Services Authority in the
U.S. governmentâ€™s investigations and enforcement actions relating to HSBC,
a British-domiciled institution, appears to have hampered the U.S.
governmentâ€™s investigations and influenced DOJâ€™s decision not to prosecute
- Attorney General Holder misled Congress concerning DOJâ€™s reasons for not
bringing a criminal prosecution against HSBC.
? DOJ to date has failed to produce any records pertaining to its prosecutorial
decision making with respect to HSBC or any large financial institution,
notwithstanding the Committeeâ€™s multiple requests for this information and
a congressional subpoena requiring Attorney General Lynch to timely
produce these records to the Committee.
- Attorney General Lynch and Secretary Lew remain in default on their legal
obligation to produce the subpoenaed records to the Committee.
- DOJâ€™s and Treasuryâ€™s longstanding efforts to impede the Committeeâ€™s
investigation may constitute contempt and obstruction of Congress.
The Committee is releasing this report to shed light on whether DOJ is
making prosecutorial decisions based on the size of financial institutions and DOJâ€™s
belief that such prosecutions could negatively impact the economy.
Here is the report. Click here.