HSBC’s wrist-slap


This week’s announcement that the Justice and Treasury departments had reached a $1.9 billion settlement with the British banking giant HSBC in a federal crackdown on money laundering is a travesty. Although the penalty is a record sum, it represents just 5 percent of the $38 billion in profit HSBC reported in the past two years.

A five-year investigation revealed that HSBC transactions not only violated U.S. sanctions against Cuba, Iran, and North Korea, but also included substantial business with Mexican drug cartels. Investigators discovered financial links between the bank and al-Qaeda.

Despite these violations, there were no criminal prosecutions of HSBC executives. U.S. authorities said stiffer criminal and civil penalties might have caused the bank, which operates in nearly 80 countries, to eliminate the jobs of some of its American employees.

The U.S. government, under Presidents Obama and George W. Bush, has yet to send officials of any major bank to jail for violating banking laws. This default will not encourage banks to take U.S. sanctions or regulations seriously.

The banks will know, after the HSBC case, that the potential penalty for breaking the law will be symbolic and will not damage their bottom line — even as the United States is relying on economic and financial sanctions to try to work its will against evildoers.

The wrist-slap administered to HSBC also could fuel the belief among Americans that their country’s laws are not enforced equally. Such conclusions would reflect sadly on the quality and conduct of U.S. justice.