A source close to the investigation against HSBC Holdings Plc said that the Department of Justice is looking to prosecute individual bankers. “I understand that they are meticulously doing interviews with one primary objective driven by the Justice Department on this case, which is to identify and prosecute any individuals within the bank for which the evidence will support such an action. Prosecuting individuals is their number one priorty,” the source said on condition of anonymity.
The Justice Department initiated the investigation against HSBC because of bulk cash the bank received from money-changing firms in Mexico. Due to its receipt of this bulk cash HSBC is suspected of handling money belonging to the Mexican drug cartels. Although the Mexican drug cartels are a matter of national concern, Justice’s decision to prioritize prosecuting individual bankers may be motivated by another event hitting closer to the Department’s home.
The Justice Department was criticized last August after it reached a deal with Barclays Bank to settle alleged violations of the Trading with the Enemy Act and the International Emergency Economic Powers Act. Barclays violated U.S. sanction programs, and after being unable to determine the culprits internally, was offered a cash settlement deal by the Department. The very judge who approved the settlement said “the public has very little confidence in white collar crime prosecutions. It’s proceedings like these [that raise questions about] fairness and justice . . . People plead guilty to criminal conduct . . . [The Bank] can pay [money] for their justice – that is what the public sees.” The judge characterized the deal as a sweetheart deal and openly criticized Justice as to why no one was ultimately held responsible for the crimes the bank committed. Even Capitol Hill decried the Department of Justice for this deal and lack of individual criminal convictions.
It is with this backdrop of public disbelief, from the judge, Capitol Hill, and the people, that Justice has decided to repair its image by pursuing money laundering prosecutions against individual HSBC bankers. The circumstances surrounding the HSBC investigation may well be signalling the end of the prominent use of deferred prosecution agreements and cash settlements for white collar criminal matters. Given the embarrassment they suffered from their handling of the Barclays case, federal prosecutors may be less willing to accept deals. Prosecutors may instead focus on attaining criminal convictions (with prison time) of the actors involved in white collar criminal cases. A welcomed sign for most, but a dangerous position for some whose culpability is difficult to determine given the often murky line distinguishing legitimate economic activity and white collar crime.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or firstname.lastname@example.org.