If corporations are people, as some conservatives insist, they are some of the luckiest people in the world when it comes to criminal behavior.
This morning, the Department of Justice announced a settlement with HSBC Holdings Plc, regarding its violations of the Bank Secrecy Act, violations of other anti-money-laundering laws, and transactions on behalf of Iranian, Libyan, and Sudanese clients as well as drug criminals and terrorists. Under the agreement, HSBC will pay a record-setting $1.92 billion in forfeitures and fines but will also avoid prosecution if it undertakes reforms.
HSBC's role as a place for criminals and terrorists--as well as run-of-the-mill tax evaders--to launder their money has been public knowledge for some time and extends back more than a decade. In 2010, HSBC received cease and desist orders from the Federal Reserve and Office of the Comptroller of the Currency (OCC) related to its activities that allowed money-laundering. Earlier this year, HSBC's activities were the subject of a a scathing Senate Permanent Subcommittee on Investigations report and hearing.
While the $1.92 billion in financial penalties sets a record, the penalties only amount to 9 percent of the bank's pre-tax profits for this year--effectively a slap on the wrist.
Actual human beings (as opposed to gigantic corporations) who provide financial succor to terrorists and rogue states receive incredibly harsh treatment. For example, Mohamad Hammoud was sentenced in 2003 to 155 years in prison for providing $3,500 in financial support to Hezbollah, although a "successful" appeal reduced that sentence to 30 years. In 2005, Rafil Dhafir was sentenced to 23 years for "participating in a
conspiracy to unlawfully send money to Iraq and money laundering." In contrast, HSBC, which looked the other way while banking hundreds of millions of dollars for criminals and terrorists, will lose the equivalent of about one month's profits.
And this is hardly HSBC's first offense. In 2007, HSBC paid a $10.5 million penalty to settle a case in which the bank allowed its name and logo to be used in a fraudulent financial offering. In 2011, the OCC issued a consent order for HSBC over "unsafe or unsound banking practices" associated with its mortgage and foreclosure documentation procedures. In that same year, HSBC was ordered to pay £40 million for luring elderly customers in the UK into risky and unsuitable investments.
Nor is this is also not likely to be HSBC's last brush with the law, as traders at the bank have been linked to the LIBOR rigging scandal.
In states with "three-strikes" sentencing rules, a human HSBC would be facing a mandatory life sentence. A corporate HSBC just promises to do better next time.
And there most assuredly will be a next time.
