Regulation  

Coming clean

In the settlement, HSBC admitted to failures in monitoring its branches in Mexico.

At least $881m (£566m) of drug trafficking proceeds – including drug proceeds for the Sinaloa Cartel in Mexico, the Norte del Valle Cartel in Colombia and others – were allegedly laundered.

Hundreds of thousands of dollars passed through bank teller windows in cash-filled boxes it was claimed.

According to court documents, HSBC Group allowed prohibited transactions to be processed through US financial institutions, and it followed instructions from sanctioned entities such as Iran, Cuba and Sudan.

In one case, cited in court documents, HSBC “worked with sanctioned entities to insert cautionary notes in payment messages including ‘care sanctioned country’, or ‘do not mention our name in NY’ or ‘do not mention Iran’.”

Filing its deferred prosecution agreement in the following month, HSBC paid $1.9bn (£1.2bn) in fines and forfeitures – this is, as Mr Mazur points out, “roughly 10 per cent of the pre-tax profits it earned in just 2010, one of the more than five years during which it admitted to prohibited transactions”.

No single executive was held responsible or faced criminal charges.

Some observers might claim that bank staff were naïve about this money’s source, but Mr Mazur’s issue is that under the deferred prosecution process there is little or no incentive for bank officers or chief executives to be more vigilant, if turning a blind eye comes with little or no penalty and rich rewards.

Mazur is one of the few commentators to have worked inside both cocaine cartels and London’s banks and seen how the system works first hand. He snared the elite of Pablo Escobar’s Medellin cartel, secured vital last-minute evidence in the prosecution of Panamanian General Manuel Noriega, and secretly taped more than a half-dozen relationship managers and senior executives at BCCI admitting that they were fully aware that money flowing into the London headquarters came from Colombian cartels.

With 27 years’ experience as a federal investigator, Mr Mazur has been able to offer a vivid insight into how criminality operates in the City that belies the notion that high-end money laundering is about mobsters with violin cases.

Working for Pablo Escobar’s cartel, Mr Mazur slowly worked his way up the hierarchy, establishing trust until he had an open invitation from the board members of the cartel that were dotted around the world.

But he also witnessed how the handling of drug money became indivisible from everyday life.

He said: “The people I dealt with in London [in the early 1990s] were all bankers. Outwardly, quite proper – but secretly very connected to power.”