HSBC, Europe's largest bank, is expected to get hit with a fine of at least $1.9 billion, the biggest bank fine ever, to settle money laundering investigations in the United States. The official announcement is due on Tuesday, but preliminary reports don't look good for HSBC. It's not so much that the bank was laundering it's own money -- that probably would not have cost them billions of dollars in the long run. It's really the fact that HSBC did business with some pretty shady customers in Mexico, Iran, Syria and Saudi Arabia. In other words, HSBC's client list included a bunch of drug lords, suspected terrorists and war mongers.
There is a law against trading with the enemy. It's called the Trading with the Enemy Act, and HSBC is expected to confess to breaking it as well as the Bank Secrecy Act as part of its settlement deal. For its crappy oversight, HSBC will pay $1.25 billion in forfeitures, a record high sum, and an addition $665 million in civil penalties. U.S. regulators hope that this will set an example for other banks who might be tempted to manage the giant, illegitimate fortunes of the world's most reviled people. And evidently, the banks really need an example, since they can't seem to stop helping the villains launder their money. This is the sixth such money laundering case involving foreign banks that American authorities have dealt with since January 2009.
What about the American banks? Are they angels? Nah -- they'll will get their turn in court for money laundering offenses very soon. Bank of America and JPMorgan are first in line.