Fighting 'Too Big to Jail'

Lawmakers call for criminal prosecution of banks convicted of money laundering.


HSBC Bank USA engaged in a "historic" agreement after failing to monitor questionable wire transfers between 2006 and 2009.

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According to a DOJ spokesperson, the criminal conduct at HSBC occurred on such a broad level that the compliance failures could not be linked to specific individuals. In order to charge someone with a criminal offense, the DOJ would need evidence beyond a reasonable doubt that they willfully intended to fail to maintain anti-money-laundering policies.

But Cruz is certain that senior bank employees knew they were breaking the law. "All this financial fraud, it's just like this whole corrupt system is designed for those people just to make money and everybody else to get hurt, and nothing happens to them," he says.

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HSBC isn't the first bank that's been caught laundering money in recent years. Wachovia, a U.S. bank now owned by Wells Fargo, entered into a similar deferred prosecution agreement in 2010 after an investigation by the DOJ revealed that wire transfers from Mexico were being used to buy aircraft in the United States that were, in turn, moving illegal narcotics. Although fined $50 million in addition to a $100 million forfeiture agreement, no Wachovia employees were prosecuted for breaking the law.

Authorities say they have pursued every lead in search of incriminating evidence at HSBC and will not hesitate to prosecute individuals if such evidence comes to light. In the meantime, says a DOJ spokesperson, deferred prosecution agreements allow for changes to corporate culture because of the strict compliance standards the banks will be forced to follow in order to avoid full prosecution.

But lawmakers are not convinced. "In the absence of any indictments in cases involving 'egregious' misconduct, the negative incentives that encourage and reward rule breaking will remain unchecked," wrote Waters in her letter. Money-laundering experts agree. "Where money is moving around the world in a blink of an eye, law enforcement is moving at the pace of molasses in following it," says Heather Lowe, Legal Counsel and Director of Government Affairs at Global Financial Integrity, a research and advocacy organization which addresses illicit financial transactions in developing countries. But lawmakers are hoping the government can catch up.

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