A few articles on various bank fiascos: first private settlement for manipulating LIBOR, two rumored criminal investigations for selling MBS’s, and a billion dollar settlement for money laundering.
11/13 – Reuters – Barclays in $120 mln settlement of Libor case – lawyers – Barclays is first out of the gate settling private lawsuits in US for manipulating Libor. …
Another bank, Credit Agricole, settles up for money laundering, with tab under a billion. Standard Chartered under a new investigation. Toshiba identifies 30 more senior staff who participated in the accounting schemes.
10/1 – Accounting Today – Toshiba Says 30 More Executives Names in Accounting Scandal – In addition to three former presidents resigning, an additional 30 executives have been identified in as players in the Toshiba book cooking scandal. None of the 30 will be fired.
Current over statement of income is estimated at US$1.3B in the article with a US$6B loss in market value.
10/20 – Wall Street Journal – Credit Agricole to Pay $787 Million in U.S. Sanctions Case and IRS – Credit Agricole Corporate and Investment Bank Admits to Sanction Violations, Agrees to Forfeit $312 Million.
Another bank had institutional policies to willfully circumvent US rules on money laundering for banks and individuals in sanctioned countries. NY DFS says total laundered amount was $32B. The bank admitted to one felony charge in a deferred prosecution agreement.
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The dubious distinction of drawing the largest fine for manipulating Libor goes to Deutsche Bank. Their total tab is now $3.5B. That leaves UBS in a distant second place at $1.6B.
Check out two articles on April 22:
Deutsche Bank will pay slightly over $2.5 billion to settle up for manipulating Libor, Eurbor, and Tibor (Tokyo interbank). Several specific Directors and VPs will be fired.
A subsidiary company in Britain will plead guilty to violating American criminal laws.
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Change in massive organizations is slow. Here are a few articles on the speed of compliance to prevent future fiascos.
4/1 – Wall Street Journal – HSBC Monitor Says Bank’s Compliance Progress Too Slow and 4/1 – Deal Book at NY Times – HSBC Is Deemed Slow to Carry Out Changes – Quarterly report from the monitor on the 2012 DPA says he thinks the bank is not making enough progress on improving the anti-money laundering program. HSBC is now in year three of a five-year DPA.
On the other hand, progress takes time…
4/2 – This is Money at Daily Mail – Senior HSBC executive privately admits another major regulatory breach is ‘cast-iron certainty’, according to reports – This report got lots of coverage. I think it was reported elsewhere earlier than this article.
A senior compliance officer reportedly said that there is a high probability of another major regulatory violation at some point in the future. Several commenters and one headline I saw spun this as meaning the bank intends to break the law again.
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Bank fiascos – slow progress on changing cultures to prevent the next fiascoRead More »
The newest member of the elite club of banks that write billion dollar checks to settle up with the regulators is Commerzbank AG, the second largest bank in Germany.
After reading several reports on the billion and a half settlement, it seems to me that their corporate culture, at the core personality level, is to be not overly concerned about complying with US law.
The two primary issues are aiding and abetting the billion-dollar Olympus fraud and processing a quarter billion dollars of wire transfers for Iranian and Syrian customers banned from the US banking system.
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Not much new reporting in the last week or so on HSBC. There has been a huge amount of political blowback in Europe, especially England. I’m not going into that turmoil.
Irony alert: last article I’ll mention suggests that money laundering may now be illegal in Switzerland, land of the numbered bank account.
Here is the last of the major Guardian articles:
2/12 – The Guardian – HSBC files: Swiss bank hid money for suspected criminals – Part 5. Depressing read.
Alleged crooks HSBC dealt with: …
Maybe, just maybe, there may be some criminal charges individually and corporately.
2/9 – New York Times – Justice Department Is Seeking Felony Pleas by Big Banks in Foreign Currency Inquiry
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Maybe some criminal prosecutions this time around from HSBC and forex investigationsRead More »
Major breaking news this weekend is the extent of shady dealings at HSBC’s subsidiary in Switzerland. Lots of dirty money accepted for deposit at the bank and lots of assistance provided to money launderers and tax evaders.
HSBC says they have cleaned up their act since 2008.
2/8 – The Guardian – HSBC files show how Swiss bank helped clients dodge taxes and hide millions – Part 1. Large volume of leaked files show a HSBC subsidiary in Switzerland actively helped clients evade taxes.
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There is radical change all around us and more on the way. I know that. My blind spot is figuring out how that will affect my audit firm.
(Cross-posted from my other blog, Outrun Change.)
Here’s one part of radical change I can see on the horizon:
1-24 – Wall Street Journal – Bitcoin and the Digital-Currency Revolution / For all bitcoin’s growing pains, it represents the future of money and global finance.– For a brain stretcher on digital currency, check out the article. Focus is on Bitcoin, which is merely the starting point in a revolution of disintermediation.
Just like money funds disintermediated (that means cut out of the picture) bank deposits in the distant ‘80s, bitcoin and other yet-to-be-invented digital currencies will disintermediate a huge portion of the financial system.
Picture the long series of transactions when you buy a cup of coffee at the corner shop with your credit card (this is a long quote cited under fair use, oh, also to promote the book it is extracted from): …
No massive publicity on the banking front, but there are ongoing issues in getting money laundering under control and the ongoing investigations of manipulating foreign exchange rates.
1/14 – Wall Street Journal – Forex Probe Finds New Signs of Potential Wrongdoing – Scope of the Forex fiasco and related U.S. Federal investigation is growing. Investigators have found new issues and that the manipulation of exchange rates may go beyond trading desks.
There is also a wider investigation running that I’ve seen mentioned: …
Here are a few possibilities for the record level of settlements for bank in ’14: Wrapping up the legacy issues from the financial crisis. Regulators are getting serious about pushing big banks to improve their operations. Or maybe regulators just want more money. Or maybe banks are getting worse at obeying the law.
Some articles for you to ponder:
12/30 – Wall Street Journal – For Banks, 2014 Was a Year of Big Penalties – Here’s my interpolation of the fines and legal costs for the largest banks, as presented in the article’s graph:
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What is behind the record $56 billion in bank fines in 2014?Read More »
A few links and comments of interest to auditors: continued investigations of TBTF banks, get an engagement letter, and more on The Economist article:
12/9 – Guardian – Standard Chartered under pressure as US regulators relaunch investigation – …
Those big banking disasters won’t go away. Ripple effects keep showing up, this time from breaking money laundering rules.
A number of US soldiers wounded in terrorist attacks while in Iraq have sued a number of banks for their role in facilitating the money transfers to fund the attackers.
This ties in to the money laundering fiasco of banks allowing Iranian businesses, government, and individuals to access the U.S. banking system in spite of a U.S. ban on doing so. Some of my previous posts in this tag.
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Those big banking fiascos just won’t go away. Ripple effects keep showing up.
Here are two ripples that I noticed just yesterday from the money laundering mess, one for Bank of Tokyo and another with BNP.
11/18 – Wall Street Journal – Bank of Tokyo to Pay $315 Million to N.Y. Regulator – …
Looks like it is really hard to prove individual culpability for conspiracy when a banker’s employer was aiding tax evasion. (I don’t use the word alleged in a sentence saying a bank committed a crime because UBS has already ‘fessed up and paid a $780,000,000 fine.)
11/4 – Wall Street journal – Acquittal in UBS Case Sets Back Tax Probe – A senior executive of UBS was on trial for allegedly helping Americans evade income taxes. The feds alleged that the banker ran a conspiracy to launder money and evade taxes, with said conspiracy involving cloak and dagger techniques to hide from authorities that the bank was knowingly and intentionally laundering money for its clients.
Didn’t turn out well for those who want to see a new federal penitentiary built to hold all the bankers who belong in jail.
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