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How to Get Away With Laundering Money for Drug Dealers: Be a Big Bank

If you fight corporate crime, as I’ve done for more than 25 years, you see so many infuriating things that it becomes harder and harder to shock you.

But I can’t think of any other case that made my blood boil more than this: Trump’s Department of Justice removing even the threat of prosecution for HSBC, the giant bank that openly admitted to laundering money for drug traffickers on a massive scale.

Ok sure, I thought, if giant banks rip people off with junk mortgages, inflate the stock market, crash the economy and throw millions out of work and millions more out of their homes, they can escape criminal prosecution.

I’ve been around the block, I know how things work.

But surely, I used to think, if a bank launders money for drug traffickers on a massive scale, and tops it off by facilitating massive evasion of U.S. sanctions on countries the U.S. designates as enemies – surely, then – prosecutors would come down on the bank… right?


Turns out if a bank is big enough, and has friends in high enough places, it can get away with that, too.

To be clear, HSBC had already cut a pretty sweet deal back in 2012. Under the Obama Justice Department, mind you.

And now here comes the Trump Justice Department to put an end to what amounted to probation for HSBC.

Under the leadership of Attorney General Jeff Sessions – yeah, the guy who wants to throw the book at low-level drug offenders – the Department of Justice is about to let HSBC, the money-laundering, sanction-evading mega-bank, entirely off the hook. For violations, I’ll reiterate, that the bank admitted to committing.

The Obama Justice Department entered the original deal with HSBC in 2012. Under its terms, HSBC was permitted to escape prosecution for an extensive money laundering scandal involving Latin American cartels and countries against which the U.S. maintained sanctions. HSBC acknowledged laundering $881 million for Latin American naroctraffickers; they also admitted that their understaffed compliance department failed to monitor more than $200 trillion – trillion with a T – in wire transactions. Assistant Attorney General Lanny Breuer said at the time that the company was guilty of “stunning failures of oversight — and worse,” and that the “record of dysfunction that prevailed at HSBC for many years was astonishing.”

But instead of being forced to plead guilty, HSBC got off with a $1 billion fine and a “deferred prosecution agreement.” Under the terms of the agreement the Justice Department would delay prosecution for five years, and then agree to abandon the prosecution if the company behaved.

Why this sweetheart deal in the first place?

The worry, according to Breuer, was that a criminal prosecution of a giant bank like HSBC might bring down the company entirely, which would threaten the global financial system’s stability. “In trying to reach a result that’s fair and just and powerful, you also have to look at the collateral consequences,” Breuer said at the news conference announcing the deferred prosecution deal.

In other words, the mere fact of its excessive size enabled HSBC to escape criminal penalties. It had been judged, essentially, too big to jail.

(In case you’re wondering, Breuer defended corporate criminals before taking his post at the Justice Department, and resumed that job after leaving government. Surely entirely unrelated to the kid glove treatment.)

It’s inconceivable to me, based on my decades working on this kind of thing, that a smaller bank — or, even more unthinkably, an individual low-level drug offender — would have received the deferential treatment accorded HSBC.

Now, five years later, there’s lots of evidence that the company hasn’t behaved as it promised to do at all.

Over the course of the deferred prosecution deal, HSBC has been:

This is hardly the profile of a “reformed” business. But the DOJ, under Sessions — who once specifically said, “If you are a drug trafficker, we will not look the other way, we will not be willfully blind to your misconduct” — is releasing HSBC from any ongoing oversight.

The Justice Department’s let-them-off-easy approach for giant corporations was a moral outrage in 2012. Now Trump’s DOJ is doubling down.

But this approach isn’t just an outrage. It’s an invitation for Wall Street and megacorporations to thumb their noses (or put up a giant middle finger) at the law. Why not, when the consequences of being caught for systematic, large-scale, profitable, and unquestionably illegal violations are so trivial?

When Breuer announced the deferred prosecution deal for HSBC, he said the bank would face severe consequences if it made one more false move.

The “sword of Damocles” hung over HSBC, he said.

Well, that sword turned out to be made of foam. And the DOJ is letting it bounce right off.

Written by Robert Weissman

Robert Weissman is president of Public Citizen, a national nonprofit advocacy organization that has been standing up to corporate power and holding government accountable for 46 years.