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HSBC faces billion-dollar fine for money-laundering

Bank accused of shipping wads of money across the US-Mexico border


HSBC faces a massive fine for failing to properly implement anti-money laundering controls in the US, following an explosive hearing in which the bank's head of compliance for around a decade, David Bagley, resigned in front of the Senate.

The Senate's subcommittee on investigates had focused on five areas of abuse by the bank:

  • "Servicing High Risk Affiliates". HSBC’s US subsidiary, HBUS, took some responsibilities from its Mexican one, and "treated it as a low risk client, despite its location in a country facing money laundering and drug trafficking challenges", as the Senate put it. As just one example of a red flag which ought to have been raised, the Mexican bank shipped $7bn in physical U.S. dollars to HBUS from 2007 to 2008, outstripping banks even twice its size. The Senate alleges that HSBC should have known that this money was likely to come from drug sales.
  • "Circumventing OFAC [Office of Foreign Assets Control] Safeguards". Non-American HSBC subsidiaries actively circumvented government-imposed safeguards "designed to block transactions involving terrorists, drug lords, and rogue regimes", by, for example, sending "nearly 25,000 transactions involving $19.4 billion" through HBUS accounts over seven years without disclosing those transactions’ links to Iran.
  • "Disregarding Terrorist Financing Links". The Senate argues that HBUS shouldn't have been banking in Saudi Arabia and Bangladesh due to the high volume of terrorism-related financing that occurs there.
  • "Clearing Suspicious Bulk Travelers Checks". Over four years, HSBC cleared $29m in "obviously suspicious" travelers cheques for an unnamed Japanese bank, for the aid of Russians "who claimed to be in the used car business".
  • "Offering Bearer Share Accounts". HSBC offered thousands of accounts to companies which practice "bearer share dealing", where the equity in the company is legally owned by whoever holds ("bears") the share certificate. For obvious reasons, these stocks are hugely useful for money laundering because their ownership can be transferred without creating any sort of trail.

On the one hand, it is impossible to actually say whether or not HSBC engaged in money laundering themselves. The circumstantial evidence makes it seem highly likely that customers of theirs did, and their failure to perform proper checks means that those customers got away with it for much longer than they ought to, but it remains unclear if HSBC actually knew that they were doing it.

Of course, what HSBC did know is that they weren't properly checking. And if you want to allow something without actually allowing it, the best way to do so is loudly announce "I'll just be closing my eyes and sticking my fingers in my ears for the next five minutes, and I certainly wouldn't want anyone to do anything illegal in that time".

Just like the Libor scandal, most of what HSBC is in trouble for actually happened half a decade ago. The bank itself was aware of problems with its Mexican subsidiary in 2007, when it sent in a high-level executive, Paul Thurston, to clear up the mess, but its taken a full decade for the Senate's investigations to bear fruit. Now that they have broken cover, though, HSBC is in for a rough ride indeed.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Want to know how you really behave as a doctor? Watch yourself on video

There is nothing quite like watching oneself at work to spur development – and videos can help us understand patients, too.

One of the most useful tools I have as a GP trainer is my video camera. Periodically, and always with patients’ permission, I place it in the corner of my registrar’s room. We then look through their consultations together during a tutorial.

There is nothing quite like watching oneself at work to spur development. One of my trainees – a lovely guy called Nick – was appalled to find that he wheeled his chair closer and closer to the patient as he narrowed down the diagnosis with a series of questions. It was entirely unconscious, but somewhat intimidating, and he never repeated it once he’d seen the recording. Whether it’s spending half the consultation staring at the computer screen, or slipping into baffling technospeak, or parroting “OK” after every comment a patient makes, we all have unhelpful mannerisms of which we are blithely unaware.

Videos are a great way of understanding how patients communicate, too. Another registrar, Anthony, had spent several years as a rheumatologist before switching to general practice, so when consulted by Yvette he felt on familiar ground. She began by saying she thought she had carpal tunnel syndrome. Anthony confirmed the diagnosis with some clinical tests, then went on to establish the impact it was having on Yvette’s life. Her sleep was disturbed every night, and she was no longer able to pick up and carry her young children. Her desperation for a swift cure came across loud and clear.

The consultation then ran into difficulty. There are three things that can help CTS: wrist splints, steroid injections and surgery to release the nerve. Splints are usually the preferred first option because they carry no risk of complications, and are inexpensive to the NHS. We watched as Anthony tried to explain this. Yvette kept raising objections, and even though Anthony did his best to address her concerns, it was clear she remained unconvinced.

The problem for Anthony, as for many doctors, is that much medical training still reflects an era when patients relied heavily on professionals for health information. Today, most will have consulted with Dr Google before presenting to their GP. Sometimes this will have stoked unfounded fears – pretty much any symptom just might be an indication of cancer – and our task then is to put things in proper context. But frequently, as with Yvette, patients have not only worked out what is wrong, they also have firm ideas what to do about it.

We played the video through again, and I highlighted the numerous subtle cues that Yvette had offered. Like many patients, she was reticent about stating outright what she wanted, but the information was there in what she did and didn’t say, and in how she responded to Anthony’s suggestions. By the time we’d finished analysing their exchanges, Anthony could see that Yvette had already decided against splints as being too cumbersome and taking too long to work. For her, a steroid injection was the quickest and surest way to obtain relief.

Competing considerations must be weighed in any “shared” decision between a doctor and patient. Autonomy – the ability for a patient to determine their own care – is of prime importance, but it isn’t unrestricted. The balance between doing good and doing harm, of which doctors sometimes have a far clearer appreciation, has to be factored in. Then there are questions of equity and fairness: within a finite NHS budget, doctors have a duty to prioritise the most cost-effective treatments. For the NHS and for Yvette, going straight for surgery wouldn’t have been right – nor did she want it – but a steroid injection is both low-cost and low-risk, and Anthony could see he’d missed the chance to maximise her autonomy.

The lessons he learned from the video had a powerful impact on him, and from that day on he became much more adept at achieving truly shared decisions with his patients.

This article first appeared in the 01 October 2015 issue of the New Statesman, The Tory tide