HSBC, banker of choice for Team Gupta, named in fresh moneylaundering scandal

By Derek Alberts

An explosive exposé by the International Consortium of Investigative Journalists (ICIJ), the same collective that had produced the eye-popping Panama Papers, has revealed how global banks continue to fund oligarchs, criminals and terrorists.

The report, known as the FinCEN Files, names-and-shames five global banks – JPMorgan, HSBC, Standard Chartered Bank, Deutsche Bank and Bank of New York Mellon – for having flouted international laws on money laundering from 1999 to 2017.

In the report, as published by BuzzFeed News, according to the ICIJ, more than US2$ trillion in illicit funds were channeled to mobsters, fraudsters and corrupt regimes in more than 2 100 suspicious transactions.

Of deep interest to South Africa is the identification of London-based HSBC, repeatedly fingered by veteran anti-apartheid fighter and British peer Peter Hain, for the bank’s alleged complicity in state capture.

Investigations in South Africa are continuing, notably by the Zondo Commission, to unravel the web of lies and deceit around the pillaging of resources. The relative ease through which the Gupta family, with the connivance of corrupt State and private sector individuals and entities during the tenure of recalled president Jacob Zuma, focus attention sharply on the role global banks played in the illicit movement of money.

In this regard, HSBC, the largest bank in Europe, sticks out like a sore thumb. According to the ICIJ report, HSBC continued to launder funds to Latin American drug cartels, notwithstanding a deferred prosecution deal in 2012.


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In a particularly damning indictment of the bank, the ICIJ claimed “narcotraffickers used specially-shaped boxes that fit HSBC’s teller windows to drop off the huge amounts of drug money they were pushing through the financial system”.

Under the deal with prosecutors, HSBC paid US$1.9 billion in return for criminal charges against the bank to be stayed, and dismissed them after five years if the bank “kept its pledge to aggressively fight the flow of dirty money”. But, claimed the ICIJ,  HSBC continued to move money on behalf of dubious characters, including suspected Russian money launderers and a Ponzi scheme under investigation in multiple countries.

In December 2017, HSBC proclaimed it had fulfilled its commitments. Asked about specific transactions, the bank said ICIJ’s information is “historic and predates” the end of its five-year deferred prosecution deal. “HSBC is a much safer institution than it was in 2012,” it said.

Alarmingly, the report points out that the US$2 trillion in suspicious transactions “is just a drop in a far larger flood of dirty money gushing through banks around the world”. Put differently, the FinCEN Files represent less than 0.02% of the more than 12 million suspicious activity reports that financial institutions filed with FinCEN between 2011 and 2017.

A 16-month investigation by ICIJ and its reporting partners shows that big banks continue to play a central role in moving money tied to corruption, fraud, organised crime and terrorism. It is this free flow of dirty cash that helps to sustain criminal gangs and destabilise nations.

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