Money-Laundering Of HSBC Bank In 2012

Introduction

The case is about money laundering by HSBC Bank in 2012. HSBC conducted a transaction involving illegal activities on behalf of some clients. It was illegal from the Federal Government of the United States and many other state governments. This was an electronic funds transfer of money from illegal drug sales. The transaction was arranged in a way that the law enforcement department would not notice. The notice of this transaction would result in charges against clients as well as HSBC. The loss of income would be lost if the money was found to be from illegal sources.

Discussion

CSR perspective

From the perspective of corporate social responsibility, HSBC’s action was not justified. This bank works in multiple countries of the world and provides a number of services. If any such act of duplicity is performed, this will show that the company is not complying with the policies. As the money transferred during the transaction was earned from selling drugs, this was against CSR practices.

Yes, I agree with law enforcement because it is their duty to report any such act and take necessary actions. If such deeds of dishonesty were not reported in the first place, it would lead to other companies doing the same thing.

The activities carried out by HSBC Bank cannot be justified by any means, so I disagree with their actions. However, if they have admitted wrongdoing and are willing to compensate for the losses by paying a fine, this can mitigate the effects.

Penalties by HBSC

HSBC agreed to pay the US $1.9 billion as a fine for the case of money laundering (Viswanatha and Wolf, 2012). This money is penalized because the illegal transaction is made involving the money of drug trafficking. Yes, I think that it was appropriate to fine HSBC Bank because it would result in a global disaster to prosecute the biggest bank in British (Neate, 2016). A financial calamity would occur, so giving a warning and taking a fine was a better option.

As with other actions, the Department of Justice could properly prosecute HSBC Bank.

Corporate brand image

HSBC is on the list of best-run banks in the world. Having an act of illegal behavior definitely had hit on their reputation. The trust and confidence level of the bank was damaged. They not only paid the fine, but their market standing went through a debility (Pratley, 2015).

The brand image was affected because it was considered to be the bank with a good reputation in the market, and any scandal of this degree definitely results in negative outcomes. The chairman of the bank also admitted that this scandal has horribly damaged the overall status of HBSC. The finance director of the bank admitted that it was a failure from the side of local managers because it was difficult for him to have a direct insight into bank operations. This was an act that was blamed on the manager of the Swiss Unit, where the transaction was manipulated in a way that law enforcement would not notice.

Conclusions

The conclusion derived from this case is that the act done by HSBC Bank was not right. They conducted a transaction with countries including Libya, Cuba, Iran, Sudan, and Burma that was sanctioned by the US. This was also against the bank’s CSR policy. They submitted a fine to compensate for the wrongdoings and illegal acts. It also affected the position of this bank in the market as a leading group.

References

Viswanatha, Aruna, and Brett Wolf. “HSBC to pay $1.9 billion U.S. fine in the money-laundering case.” Reuters Business News 11 December 2012.

Neate, R. (2016). HSBC escaped US money-laundering charges after Osborne’s intervention. The Guardian. Retrieved 14 March 2018, from https://www.theguardian.com/business/2016/jul/11/hsbc-us-money-laundering-george-osborne-report

Pratley, N. (2015). How HSBC’s errors and lack of oversight hit reputation as ‘world’s best-run bank.’ the Guardian. Retrieved 14 March 2018, from https://www.theguardian.com/news/2015/feb/13/hsbc-errors-lack-of-oversight-reputation-worlds-best-run-bank