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Britain's biggest bank allowed rogue states and drugs cartels to launder billions of pounds through its branches.

HSBC stands accused of fostering such a ‘polluted’ culture it became a conduit for criminal enterprises.

A top executive at the bank sensationally quit yesterday in front of a US Senate hearing that exposed the scale of the scandal.

Following the Barclays rate-fixing revelations, it deals another blow to the City of London’s reputation.

HSBC – one of the few UK banks to survive the financial crisis with its reputation intact – now faces up to £640million in penalties. A devastating 335-page Senate report accused HSBC of ignoring warnings and breaching safeguards that should have stopped the laundering of money from Mexico, Iran and Syria.

The bank failed to monitor a staggering £38trillion of money moving across borders from places that could have posed a risk, including the Cayman Islands and Switzerland. The failures stretched to dealings with Saudi Arabian bank Al Rajhi, which was linked to the financing of terrorism following 9/11.

HSBC’s American arm, HBUS, initially severed all ties with Al Rajhi. But it later agreed to supply the Saudi bank with US banknotes after it threatened to pull all of its business with HSBC worldwide.

According to the report, HBUS also accepted £9.6billion in cash over two years from subsidiaries without checking where the money came from.

In one instance, Mexican and US authorities warned HSBC that £4.5billion sent to the US from its Mexican subsidiary ‘could reach that volume only if they included illegal drug proceeds’.

Concerns over the bank’s links to Mexican drug dealers included £1.3billion stashed in accounts in the Cayman Islands. One HSBC compliance officer admitted the accounts were misused by ‘organised crime’.

London-based banker David Bagley, head of HSBC’s compliance division, which is meant to prevent breaches of the law, quit in front of the Senate committee. He had been with the bank for 20 years.

The affair is also an embarrassment for David Cameron, because his trade envoy Stephen Green chaired HSBC during the period covered by the allegations. (Lots more at http://www.dailymail.co.uk/news/article-2174785/HSBC-scandal-Britains-
biggest-bank-let-drug-gangs-launder-millions--faces-640million-fine.html)

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Last year, Wells Fargo paid a fine they could easily afford when they had purchased Wachovia bank, after Wachovia got busted laundering $110 Million dollars of drug money for foreign drug cartels. If you're keeping score at home that means if you get busted smoking a joint you go to jail, but if you get busted laundering millions of dollars in drug cartel money you get a slap on the wrist. Now, here's the catch, if you get caught smoking pot and go to jail, Wells Fargo will make a profit off of that too thanks to America's growing for-profit prison system.

As Wells Fargo has grown over the years, using its bailout funds to gobble up rival Wachovia and expand to the East Coast, so has the U.S. prison population. By 2008, one in 100 American adults were either in jail or in prison – and one in nine black men between the ages of 20 and 34, many simply for non-violent offenses, justice not so much blind as bigoted. Overall, more than 2.3 million people are currently behind bars, up 50 percent in the last 15 years, the land of the free now accounting for a full quarter of the world’s prisoners.

These developments are not unrelated. A driving force behind the push for ever-tougher sentences is the for-profit prison industry, in which Wells Fargo is a major investor. Flush with billions in bailout money and an economic system designed to siphon wealth from the working class to the idle rich, Wells Fargo has been busy expanding its stake in the GEO Group, the second largest private jailer in America. At the end of 2011, Wells Fargo was the company’s second-largest investor, holding 4.3 million shares valued at more than $72 million. By March 2012, its stake had grown to more than 4.4 million shares worth $86.7 million.

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