If it looks like a gangster... and smells like a gangster... and acts like a gangster... then....
Today, it wasn’t just banking stocks that had a rough day. European stocks overall were down by 3.9%, as concerns grow over a second wave of the coronavirus.
But banks were particularly hard hit.
One reason for the rout was the release of a report by the International Consortium of Investigative Journalists on lenders that had facilitated $2 trillion in suspicious transactions. HSBC, Deutsche Bank, Standard Chartered, JPMorgan Chase, and Bank of New York Mellon, were implicated.
Over almost two decades, the five banks had “enrich[ed] themselves and their shareholders while facilitating the work of terrorists, kleptocrats, and drug kingpins,” the report said.
Here’s a sampling of how the bank stocks reacted:
- ING: -9.27%.
- Deutsche Bank: -8.76%
- BNP Paribas -6.37%
- Santander: -6.22%:
- Unicredit: -6.17%
- HSBC: -5.26%
Deutsche Bank appears to have facilitated more than half of the leaked $2 trillion of transactions, which were flagged to the U.S. government but rarely read by investigators, let alone acted upon,
according to Deutsche Welle. Experts
said that some banks treat Suspicious Activity Reports (SARs) “as a kind of get-out-of-jail-free card”, filing “numerous reports on the same clients, detailing their suspected crimes over the course of years while continuing to welcome their business.”
HSBC is alleged to have allowed WCM777, a particularly pernicious Ponzi scheme, to move more than $15 million despite the fact the business was barred from operating in three states. The scam pilfered at least $80 million from investors, mainly Latino and Asian immigrants, while the company’s owner “used the looted funds to buy two golf courses, a 7,000-square-foot mansion, a 39.8-carat diamond, and mining rights in Sierra Leone.”
HSBC’s position is fragile, given it has already signed three deferred prosecution agreements (DPAs), an official form of probation, with the U.S. Department of Justice in the past eight years.
But patience is running thin, especially since the bank’s decision, in June, to embrace the Chinese Communist Party’s crackdown on Hong Kong, which prompted U.S. Secretary of State Mike Pompeo to accuse the bank of aiding China’s “political repression” in Hong Kong.
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