Charges of Money Laundering Against HSBC Continue to Grow Reply

Enforcement Actions • Tags: , , , , , , , ,
HSBC's Headquarters in London

HSBC’s Headquarters in London

In a press conference last week, Ricardo Echegaray, head of Argentina’s Administración Federal de Ingresos Públicos (“AFIP”), announced that the federal tax agency had charged HSBC’s local subsidiary in early February with money laundering and facilitating tax evasion.  The charges came just two months after HSBC agreed to pay a historic $1.92 billion USD fine to U.S. authorities for, among other things, laundering drug money in Mexico.

HSBC’s troubles began last summer when the U.S. Senate  published a report harshly criticizing HSBC’s regulatory controls, pointing out large gaps in the company’s money-laundering controls as well as the measures it had in place to stop the financing of terrorist organizations.  Around the same time, Mexico’s National Banking and Securities Commission (CNBV) imposed a $27.5 million fine against HSBC’s Mexican subsidiary.  In December, the company agreed to pay the Department of Justice $1.256 billion for failure to maintain an effective anti-money laundering program and to conduct appropriate due diligence on its foreign correspondent account holders.

Now facing scrutiny in Argentina, tax authorities have said that one of HSBC’s subsidiaries laundered and purposefully hid up to $616 million ARS, (roughly $120 million USD), from Argentine officials.  News reports indicate that Argentine authorities believe that one of HSBC’s local subsidiaries created an illegal scheme of fake receipts and “phantom” bank accounts to launder the money.  The HSBC Group in Argentina is made ​​up of HSBC Bank Argentina, HSBC Seguros de Vida SA (Argentina), HSBC Investment Management SA and HSBC Holdings SGFC (Argentina) SA.   More…

TRACE Remembers Author Chinua Achebe Reply

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Last week, on March 21, celebrated Nigerian author Chinua Achebe passed away at the age of 82.  TRACE recognizes not only the literary importance of Achebe’s work, but also the significance that many of his essays and novels had in critically evaluating difficult problems of corruption in Nigerian society.

Chinua AchebeFrom the Niger Delta to International Acclaim

Achebe was born on Nov. 16, 1930 in Nigeria’s southeastern delta region in the Igbo town of Ogidi. The region is also home to Bonny Island, which many in the FCPA community may recognize as the location of a massive bribery scheme by the TSKJ consortium to bid for the construction of liquefied natural gas facilities throughout the 90’s and early 2000’s.  (You can read more about the TSKJ scandal on the TRACE Compendium).

Achebe’s first novel, Things Fall Apart, chronicles the history of a small Nigerian village during the time of British colonization.  Like many of Achebe’s works, Things Fall Apart is both eminently readable while still presenting the reader with complex analytical themes.  This great storytelling made Achebe into the most widely-read African writer of all time.  Things Fall Apart sold more than 10 million copies worldwide and is now standard required reading for many American high school and college students. More…

Special Report: Navigating the Iran Sanctions and Protecting Your Business With TRAC Due Diligence Reply

Compliance • Tags: , , , ,

Today, TRACE Blog provides special guidance on what new regulations have been passed against Iran, and we also tell you what that may mean for your business.  For those companies that are affected, we offer advice on how the use of internet-based platform technology is helping companies to cost-effectively share due diligence information and comply with the law.  You can also download the full report by clicking on the following link: Special Report- Iran Sanctions.

Iran Pocket GuidePick up almost any newspaper these days and you’re likely to read yet another disconcerting story about deteriorating relations with Iran.  It’s been a full seven years now since the United Nations Security Council first passed sanctions against Iran because of its uranium enrichment program, and since then mounting evidence shows that Iran is only getting closer to developing the technology for a nuclear bomb.

In response, the U.S. government — along with a growing list of other countries — has been busy passing a wide range of economic regulations aimed at cutting off trade with the sanctioned country.  These efforts reportedly halved the export of Iranian oil in 2012.

But not all of these economic sanctions are aimed strictly at the Iranian Government.  Many are in fact aimed at U.S. and foreign companies.  US lawmakers are increasingly prohibiting companies from engaging in most forms of business with Iran, including dealings in the energy sector, shipping or the sale of coal or precious metals.  Congress has also required that companies report any dealing they may have with the Iranian Government, no matter the industry, including even if they are simply conducting business with a third party who is trading with Iran.

The net effect of these new rules has meant that businesses must conduct yet another level of due diligence screening of their business associates.  Technology-savvy companies, however, are taking advantage of new web-based due diligence platforms that allow them to conduct first-level reviews on a wide range of third parties at a fraction of what it would normally cost. More…

The Mobile Phone: The Newest Weapon Against Low-Level Corruption Reply

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Mobile Phone & CorruptionHad the mobile phone existed in 1839 when English author Edward Bulwer-Lytton coined the phrase “the pen is mightier than the sword,” he may have opted instead for the phrase, “the phone is the mightiest weapon of them all.”  Millions of people who experience corruption in their day-to-day interactions with police officers, health inspectors, customs officials and other low-level government officials are fighting back by using their mobile phones to record conversations, report bribes and quickly understand their legal rights.  In this new world of grassroots empowerment, technology – specifically the little phone that fits in your pocket – has played a dramatic role in shifting the balance of power between individuals and local officials.

  • Audio and video recording.  Not only are phones getting smaller, but they are getting “smarter” too, allowing us to simply hit a button to record video and audio, connect to the internet and run complex software programs.  In the UK and Spain, smartphones now outnumber other kinds of telephone subscriptions.  Even the simple act of telling a government official that you are recording your conversation with them will likely change the way they act.  Many may become irritated, but they are much less likely to dare to demand a bribe if they know that they’re on tape.  And lots of apps, like USTREAM, iTalk Recorder, and Mobile Podcaster have even been developed to quickly allow people to broadcast anything they record on their phones onto social media platforms like Twitter or Facebook.  Corrupt official beware: asking for a bribe may make you into an instant internet celebrity!
  • Know-your-rights.  Knowledge is power, especially when dealing with a corrupt official who may be accusing you of violating some obscure law or regulation.  Does Civil Code Section 4.b actually prescribe a penalty of $400?   Is it truly illegal to drive with unopened alcohol in your backseat?  Mobile apps like Antimordidas in Mexico and Kanoon in India allow individuals to access and search laws and regulations at a moment’s notice.  More…