Ethical Issues in Managerial Accounting
HSBC ethical and legal scandal
HSBC is one of the largest financial institutions in the world, with over $2.5 trillion in assets, 89 million customers, 300,000 employees, and 2011 profits of nearly $22 billion. HSBC has operations in over 80 countries, with hundreds of affiliates spanning the globe. Its parent corporation, HSBC Holdings, called “HSBC Group” is headquartered in London. Its key U.S. affiliate is HSBC Bank USA N.A. (HBUS). HBUS operates more than 470 bank branches throughout the United States, manages assets totaling about $200 billion, and serves around 3.8 million customers. It holds a national bank charter, and its primary regulator is the U.S. Office of the Comptroller of the Currency (OCC), which is part of the U.S. Treasury Department. Even thought HSBC is one of the biggest and most powerful banks in the world, it ran into the number of legal and ethical issues that led to severe legal consequences. HSBC lacked adequate control processes in compliance and anti-money laundering. It was also involved in illegal cash transfers from criminals and terrorists and helped many customers launder money by opening thousand of accounts in Jersey. The deficiencies and negligent controls inside HSBC included an inability to properly monitor $15 billion in cash transactions between 2006 and 2009, poor staffing and high turnover in the bank's compliance units. These issues were partly caused by its widespread affiliates operated with a degree of independence that left chief bank officials with less authority and control. Each affiliate had its own officer to manage compliance with laws to prevent money laundering. Nigel Morris-Cotterill, head of the Anti Money Laundering Network, a consultancy based in Kuala Lumpur, Malaysia, said international banks face conflicts between laws and regulations in different countries. "There are times when the lines are blurred, when you're not clear exactly where...
References: Fox News.com: HSBC to pay $1.9B to settle money-laundering case. (2012) Retrieved from
NBC News: Report: HSBC allowed money laundering that likely funded terror, drugs. (2012) Retrieved from
Rob Davies. (2012) Mail Online: HSBC 'held offshore accounts for criminals ': Bank accused of helping customers launder money by opening thousands of accounts in Jersey. Retrieved from
BBC News: HSBC money laundering report: Key findings. (2012) Retrieved from
Carl Levin, Tom Coburn (2012). U.S. Vulnerabilities to Money Laundering, Drugs, and Terrorist Financing: HSBC Case History.
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