While we were cramming for finals last semester, the British bank HSBC remorsefully boasted to the world that they had reached a $1.92 billion settlement with the U.S. government, their penalty for laundering many billions of dollars for numerous violent drug cartels and global terrorist organizations, and in doing so, tarnishing every law that stood in their way.
LannyBreuer, the criminal division chief for the Justice Department, was in charge of bringing HSBC to justice. During the 1990s, as a lawyer in private practice, he worked to defend mammoth banks and financial conglomerates in foreclosure fraud cases. Despite his different office at the Justice Department, Lanny has remained committed to his noble fight to protect the world's largest and most evil banks from criminal prosecution.
According to Breuer, drug dealers in Mexico sought out HSBC; they deposited on a scale of "hundreds of thousands of dollars in cash, in a single day, into a single account." Following a February 2008 meeting between HSBC representatives and Mexican authorities, the two parties traced $1.1 billion of laundered money from American HSBC branches to branches in the state of Sinaloa, home to the notorious eponymous cartel and Mexico's most wanted criminal.
Despite the heinous crimes that Mexican and Colombian drug cartels commit, which include widespread human trafficking in collaboration with Hezbollah, and, in the case of Mexican cartels, upwards of ten thousand murders a year, the Justice Department decided to forego seeking an indictment against the bankers who fund, and thereby enable, international drug smuggling. Instead, they opted to settle for a meager fine equivalent to five weeks of income for HSBC (net worth: roughly $2.5 trillion).
The settlement means that no HSBC-employed international criminals were sentenced to prison. None. That's roughly 350,000 fewer bankers behind bars than the number of inmates currently serving time for simple drug possession and street level distribution crimes. But the villains over at HSBC, who've reaped profit by helping drug cartels saturate the insatiable American drug market with the very same narcotics for which small-time offenders are incarcerated, are free to blow Colombian cocaine by their mini-mansions' Jacuzzis.
Not one of HSBC's henchmen will see the inside of a prison cell. The victims of the drug cartels they worked with, though - the ill drug addicts on America's streets - are swept up and thrown away to rot behind bars. But that's par for the course of America's "War on Drugs."
According to the United Nations Office on Drugs and Crime, international banks absorbed roughly $325 billion in drug money in 2009. This whopping total signals that the fiscal benefit of laundering drug money is no match for the relatively meager cost banks might pay if they're caught (the $1.92 billion HSBC has surrendered is the most costly settlement of its kind to date). As long as that cost-benefit analysis favors banks, they will continue to work with drug cartels.
Deterring potential money laundering bankers from assisting criminals by imprisoning the crooks at HSBC could have inconvenienced some cartels, but it's not merely access to laundering that allows and encourages drug cartels to violently profit. Instead, the underground nature of the market within which they operate offers the world's most violent criminals the opportunity to conduct their lucrative business.
The solution is not merely to avoid repeating the errors of the Justice Department, but to eliminate the black market within which cartels participate. Only in a post-Drug War society, in which black market drugs are brought above ground, will banks be dissuaded from providing cartels with a corporate cover. Only in a post-prohibitionist society will cartels crumble.
