Academic Master

Business and Finance

Money-Laundering of HSBC bank in 2012

Case Study


The case is about money-laundering of HSBC bank in 2012. HSBC conducted a transaction involving illegal activities on the behalf of some clients. It was illegal from Federal Government of the United States and many other state governments. This was an electronic funds transfer of money from the illegal drug sales. The transaction was arranged in a way that 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.


CSR perspective

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

Yes, I agree with law enforcement because it is their duty to report any such act and take necessary actions. If such deed of dishonesty would not be reported in the first place, it will 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 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 global disaster to prosecute the biggest bank of British (Neate, 2016). A financial calamity would occur so giving a warning and taking fine was a better option.

As other actions, the proper prosecution could be conducted on HSBC bank by the Department of Justice.

Corporate brand image

HSBC comes in 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 result in negative outcomes. The chairman of bank also admitted that this scandal has horribly damaged the overall status of HBSC. The finance director of the bank admitted that it was the failure from the side of local managers because it was difficult for him to have direct insight of bank operations. This was an act that was blamed on the manager of Swiss Unit where the transaction was manipulated in a way that law enforcement would not notice it.


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 CSR policy of the bank. 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.


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 interventionthe Guardian. Retrieved 14 March 2018, from

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



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