HSBC in hot water over money laundering suit; Money laundering report set to surface in public
Feb 11, 2016 09:34 PM EST
HSBC is under fire for its alleged contribution in the money laundering business of drug cartels from 2010 to 2011. The company is facing a class suit instituted by the families of the murdered victims of the drug cartels in Mexico.
The suit indicts HSBC for bad faith in knowingly aiding international drug and trafficking trade of drug syndicates. In 2012, the bank paid a $1.9 billion fine to get off charges that it failed to stop the flow of drug money from Mexico, CNBC reported. Since then, every Wall Street bank has had its own monitors appointed by the New York Department of Financial Services and the Department of Justice.
In Tuesday, U.S. District Federal Judge John Gleeson extended the two-week deadline to Feb. 26 to release a report that may or may not prove that HSBC has complied with the anti-money laundering requirements under the law. The 250-page report has been prepared by a federal appointed monitor Michael Cherkasky as part of HSBC's pact with the Justice department in 2012.
Judge Gleeson previously rejected efforts from the Justice Department and HSBC to keep the subject report sealed. "I find that the Report is a judicial record, and that the public has a First Amendment right to see the Report," he wrote.
In contention, the Justice Department argued that the record should be kept under wraps because it might provide a roadmap for criminals who are seeking ways to launder money, Reuters reported.
Meanwhile, Judge Gleeson said that he is inclined to stick to his call to unseal the record and swaying him otherwise will be a tall order. For now, HSBC is given time to appeal the decision.
The issue on whether or not the report should be made in public would never have been brought on the table if not for HSBC mortgage costumer Hubert Dean Moore of Pennsylvania, New York Post reported. Moore allege that HSBC broke federal laws when it sold his mortgage without notice. He says that the report will reflect operational problems that will bolster his claim with the Consumer Financial Bureau.
Should the report be shown in public, federal prosecutors opined that HSBC is under a serious money-laundering sanction risk. The decision will likely set precedence and may shake the rest of Wall Street banks that struck a deal to keep such records in private.