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Money laundering redux

CharteredLondon-based Standard Chartered Bank stands accused by New York regulators of laundering $250 billion in oil money for Iran.

It follows a string of similar scandals, such as one uncovered at HSBC, in which offices in Buffalo helped to launder money from Mexican drug cartels, shady Russian business men and terrorists. HSBC ended up setting aside $700 million to cover penalties for that activity.

The New York Times has an interesting story today that looks at how each of the banks exploited a weak law in order to make money laundering easier:

Foreign banks until 2008 were allowed to transfer money for Iranian clients through their American subsidiaries to a separate offshore institution. In the so-called U-turn transactions, the banks had to provide scant information about the client to their American units as long as they had thoroughly vetted the transactions for suspicious activity. Suspecting that Iranian banks were financing nuclear weapons and missile programs, the loophole was finally closed in 2008 . . . .

Foreign banks until 2008 were allowed to transfer money for Iranian clients through their American subsidiaries to a separate offshore institution. In the so-called U-turn transactions, the banks had to provide scant information about the client to their American units as long as they had thoroughly vetted the transactions for suspicious activity. Suspecting that Iranian banks were financing nuclear weapons and missile programs, the loophole was finally closed in 2008 . . . . 

Since the tighter sanctions went into effect, there have been no charges brought on post-2008 conduct, although Treasury’s letter says that investigations are ongoing.

Gina Talamona, a Justice Department spokeswoman, said that the lack of recent illegal conduct is because the settlements with foreign banks “required the banks to implement rigorous compliance programs and other safeguards” against further violations of sanctions. She said that the department’s enforcement program “has had a significant impact on banking industry practices involving sanctions.”

- Samantha Maziarz Christmann


Some Libor laughs

The Libor Scandal is no laughing matter. London bankers' practice of reporting false interest rates misrepresented the health of the British banking industry and has caused ripple effects in everything from mortgages and student loans to derivatives and a myriad of financial products.

But if it bums you out to know how casually this sort of thing goes on, take a look at it from the lighter side.

                                                             

 

Walmart execs preach ethics

MikeDuke

Walmart held its annual shareholder meeting, facing investors for the first time since the New York Times blew the lid off an executive-level scandal at the company, involving the bribing of Mexican officals.

In preparation, the company also addressed a gathering of thousands of workers, including 1,300 international ones. Instead of addressing the scandal directly, the Wall Street Journal reports, CEO Mike Duke called for "keeping" integrity Walmart's highest priority.

Duke, who has been asked to step down from his post by activist pension funds and proxy firms, preached integrity to the crowd.

"Football, soccer, cricket, the one thing that's always important is playing by the rules," Duke said, according to the journal report.

DougMcMillon

Shelly Banjo of the Journal continues:

International division chief Doug McMillon emphasized that despite pressure to grow, employees and management needed to comply with government laws even "when no one is watching."

"Is this clear?" he shouted sternly to the arena filled with workers.

The executives' grandstanding reeks of hypocrisy, according to critics including Kevin Coupe of MorningNewsBeat.com:

If I were a Walmart shareholder - or an employee, or business partner - I think I'd be less concerned with unethical behavior in the ranks than I would be with such transgressions at the highest levels of the company. They can make it sound like rogue employees wandering around Mexico handing out bribes, but the Times story suggested that the bribery was both systemic and systematic, and that they were covered up in Bentonville. That's what top execs will have to answer for . . . . There are those at Walmart who would like people to think that all the ethical transgressions took place south of the border, but to me, that seems unlikely.