Too Big To Jail? HSBC
& Terrorist Finance
Black Dossier: HSBC & Terrorist Finance
July 30, 2012
By Tom Burghardt
It's tough being the world's second largest bank.
HSBC, the London-based British multinational banking and financial
services giant operates in 85 countries with 7,200 offices worldwide with
assets totaling more than $2.6 trillion (£4.06tn).
They're also caught-up in serial scandals: the Libor interest rate-fixing
scam, serious charges of drug money laundering as well as suspicions that
bank officers "palled around" with terrorist
Founded in 1865 when the British Crown seized Hong Kong as a colony in
the aftermath of the First Opium War, British merchants (today we'd call
them drug lords) needed a bank to handle the brisk trade in the illicit
substance and launched the Hongkong and Shanghai Banking Company Limited.
Rebranded "HSBC" in 1991, the bank expanded at breakneck speed
in the heady days after The Wall fell.
While some might call them a success story, exemplars of financial
wizardry in tough economic times, more appropriately perhaps, we might
borrow a term from Mafia lore to describe their preeminent position in
the capitalist pantheon of corrupt institutions: juiced.
'Sorry, now Go Away'
Today, the "War on Drugs" rivals the "War on Terror"
for top spot on the global hypocrisy index.
Moral equivalencies abound. After all, when American secret state
agencies manage drug flows or direct terrorist proxies to attack official
enemies it's not quite the same as battling terror or crime.
Pounding home that point, a new report by the Senate Permanent
Subcommittee on Investigations accused HSBC of exposing "the U.S.
financial system to a wide array of money laundering, drug trafficking,
and terrorist financing risks due to poor anti-money laundering (AML)
That 335-page report, "U.S. Vulnerabilities to Money Laundering,
Drugs, and Terrorist Financing: HSBC Case History," (large pdf file
available here) was issued after a year-long Senate investigation
zeroed-in on the bank's U.S. affiliate, HSBC Bank USA, N.A., better known
Drilling down, we learned that amongst the "services" offered
by HSBC subsidiaries and correspondent banks were sweet deals with
financial entities with terrorist ties; the transportation of billions of
dollars in cash by plane and armored car through their London Banknotes
division; the clearing of sequentially-numbered travelers checks through
dodgy Cayman Islands accounts for Mexican drug lords and Russian
From richly-appointed suites at Canary Wharf, London, the bank's
"smartest guys in the room" handed some of the most violent
gangsters on earth the financial wherewithal to organize their respective
industries: global crime.
A case in point. In 2008 alone the Senate revealed that the bank's Cayman
Islands branch handled some 50,000 client accounts (all without benefit
of offices or staff on Grand Cayman, mind you), yet still managed to ship
some $7 billion (£10.9bn) in cash from Mexico into the U.S. Now that's
Playing fast and loose with U.S. banking rules, Subcommittee Chairman
Carl Levin (D-MI) said that by exploiting the bank's "poor AML
controls, HBUS exposed the United States to Mexican drug money,
suspicious travelers cheques, bearer share corporations, and rogue
Describing a "compliance culture" that was "pervasively
polluted for a long time," Levin said it "will take more than
words for the bank to change course."
Yet weasel words and butt-covering were all that were proffered to the
American people even before Senate hearings began. Bank spokesman Robert
Sherman said in an emailed statement that HSBC "will acknowledge
that, in the past, we have sometimes failed to meet the standards that
regulators and customers expect. We will apologize, acknowledge these
mistakes, answer for our actions and give our absolute commitment to
fixing what went wrong."
Right on cue, chief compliance officer David Bagley dramatically fell on
his sword during those hearings and resigned on camera. It was quite a
performance even by Washington's tawdry standards.
Appearing contrite, Bagley told the panel: "Despite the best efforts
and intentions of many dedicated professionals, HSBC has fallen short of
our own expectations and the expectations of our regulators. ... I
recommended to the group that now is the appropriate time for me and for
the bank, for someone new to serve as the head of group
While there's no word yet just how big Bagley's golden parachute will be,
it's a sure bet he won't spend a day in jail, nor for that matter will
Lord Stephen Green, HSBC's former Chairman and Chief Executive
Between 2003-2010, Green tilled the helm after serial stints directing
The Bank of Bermuda Ltd., HSBC Mexico, SA, HSBC Private Banking Holdings
(Suisse) SA and HSBC North American Holdings Inc.; units which feature
prominently in the scandal. Sensing perhaps that the jig was up, last
year he joined David Cameron's Conservative government as Minister of
State for Trade and Investment.
Unlike Pappy Bush who claimed to be "out of the loop" during
the Iran-Contra guns-for-drugs affair, Green was fully apprised of bank
shenanigans and the Senate published emails which prove it.
Cheekily however, while underlings take the fall, Green told The Daily
Telegraph, "I do not believe that I have a case to answer other than
in the important sense that as chairman and chief executive I was
responsible for what the company did. HSBC has expressed regret for the
failures. I share that regret."
The Telegraph noted that Green has not considered resigning from
Cameron's government, saying he was "very engaged" with his
current plum post.
Ironically enough, the current Baron of Hurstpierpoint is an ordained
priest in the Church of England and the author of an inspirational tome,
Good Value: Reflections on Money, Morality and an Uncertain World. And
no, you can't make this stuff up!
The top spot is now occupied by Stuart Gulliver who, quicker than you can
say "we're sorry," admonished employees to "do
better" and expressed remorse over his firm's "unacceptable
behavior." Never mind that before ascending the throne, Gulliver was
director of HBUS, HSBC Latin American Holdings Ltd., and HSBC Bank Middle
East Ltd., divisions that have raised more than an eyebrow or two amongst
Topping Bagley's Kabuki-lite performance with her own rendition of clown
car camp, Irene Dorner, HBUS's President and CEO told the Senate:
"We deeply regret and apologize for the fact that HSBC did not live
up to the expectations of our regulators, our customers, our employees,
and the general public. HSBC's compliance history, as examined today, is
unacceptable. ... We've worked hard to foster a new culture that values
and rewards effective compliance, and that starts at the
Bathos aside, it was a polite way of saying "let's move on" and
get back to the business of lining our pockets; after all, it's what we
'The past is never dead. It's not even past'
Years before hijackers slammed passenger planes into the World Trade
Center and the Pentagon killing nearly 3,000 people, secret state
agencies began to exploit the fraternal links between Osama bin Laden's
Afghan-Arab database of disposable Western intelligence assets, also
known as al Qaeda, and prominent financial institutions.
In his 1999 book, Dollars for Terror, journalist Richard Labévière
relates how a former CIA analyst explained: "The policy of guiding
the evolution of Islam and helping them against our adversaries worked
marvelously well in Afghanistan against the Red Army. The same doctrines
can still be used to destabilize what remains of Russian power, and
especially to counter the Chinese influence in Central
Was a new Cold War dawning?
No. In fact, it was the same Cold War. Only this time it was tricked-out
in seductive finery by denizens of Western think-tanks and on-the-make
NGOs. In the age of spin and endless news cycles, they'd hit upon a
splendid formula to pour the "old" imperialist wine into new
bottles: "humanitarian intervention" and a "responsibility
It was a brilliant script. In the blink of an eye our media-saavy masters
could "enhance democracy" and "reform markets,"
magically transforming publicly-owned resources into privately-held
assets controlled by banks! That terrorist proxies would serve as
walk-ons and help drive the final nail into the coffin of national
sovereignty wasn't considered proper conversation in polite
Labévière wondered whether "the new forms of terrorism actually
embody the highest stage of capitalism?" They did, and "the
straw men of the bin Laden Organization's subsidiaries [were] very well
received by the business lawyers of Wall Street and the Bahamas, by the
wealth managers of Geneva, Zurich and Lugano, and in the hushed salons of
the City of London."
Not so curiously perhaps, "the privatization of violence and the
privatization of the economy has become paradigmatic." In fact,
"apart from any religious purpose," Labévière wrote, "the
'Jihad' is gaining ground as a profitable activity. It becomes liable to
all the mafioso devolutions, and sinks into pure banditry. In many cases,
Islamist ideology is used as a wonder worker to paper over banditry in
all its forms."
Bin Laden as a Mafia capo di tutti capi? It certainly was a novel reading
of geopolitical machinations!
More to the point, if an "army marches on its stomach," who
then are the money men who put food in their bellies and kalashnikovs in
Bankrolled by Saudi and Gulf banks with a wink, a nod and logistical
support from their old friends, the CIA and the Pentagon, today's Green
condottieri once again are on the march, wrecking havoc and sowing chaos,
with particular attention paid to states targeted as official enemies by
the Global Godfather. Just ask the Iraqis, Libyans and Syrians.
While the Senate report may have disclosed that HSBC turned a blind eye
to terrorist financing among it correspondent banks, the Riyadh-based Al
Rajhi Bank for one, Saudi Arabia's largest privately-held financial
institution, such arrangements hardly flourished in a vacuum.
With assets totaling $59 billion (£92.5bn), the Al Rajhi's are amongst
the wealthiest families in the Kingdom. Investigators found that after
9/11 "evidence began to emerge that Al Rajhi Bank and some of its
owners had links to organizations associated with financing terrorism,
including that one of the bank's founders was an early financial
benefactor of al Qaeda."
While the Al Rajhi family deny any role in financing terrorism, they have
declined "to address specific allegations made in American
intelligence and law-enforcement records, citing client
confidentiality," The Wall Street Journal reported back in
Journalist Glenn R. Simpson averred that "a 2003 CIA report claims
that a year after Sept. 11, with a spotlight on Islamic charities, Mr. Al
Rajhi ordered Al Rajhi Bank's board 'to explore financial instruments
that would allow the bank's charitable contributions to avoid official
"A few weeks earlier," the Journal disclosed, the Agency said
that "Mr. Al Rajhi 'transferred $1.1 billion to offshore
accounts--using commodity swaps and two Lebanese banks--citing a concern
that U.S. and Saudi authorities might freeze his assets.' The report was
titled 'Al Rajhi Bank: Conduit for Extremist Finance'."
Although U.S. law enforcement and secret state agencies "acknowledge
it is possible that extremists use the bank's far-flung branches and
money-transfer services without bank officials' knowledge," the
Journal noted that CIA analysts had concluded that "senior Al Rajhi
family members have long supported Islamic extremists and probably know
that terrorists use their bank."
It goes without saying that one should always approach CIA reports with a
healthy dose of skepticism, especially in light of the Agency's
well-documented history of employing cut-outs such as al Qaeda as
terrorist cats' paws.
Such reports however, lay a trail of bread crumbs that policy makers can
either act upon or more likely, ignore. That senior Bush and Obama
administration officials did nothing with this information, never mind
the regulatory agencies charged to enforce anti-money laundering laws, is
testament to the corrupt, bipartisan nature of American policy as a
It also beggars belief that Lord Green or the bank's compliance officers
were unaware of CIA allegations or that Britain's own foreign
intelligence arm, MI6, hadn't apprised top officials of the risks
involved. In fact, as we'll see below, HSBC's own internal documents
Osama's 'Golden Chain'
There were certainly plenty of red flags flying which should have alerted
In March 2002, al Qaeda's list of financial benefactors surfaced when
computers were seized in Sarajevo at the Bosnian headquarters of the
Benevolence International Foundation, "a Saudi based nonprofit
organization which was also designated a terrorist organization by the
Osama bin Laden, who held a Bosnian passport issued by the breakaway
government fronted by Western "liberal interventionist" darling
Alija Izetbegovic during NATO's dismemberment of socialist Yugoslavia,
was a supporter of the Nazi SS Handschar Division during World War II.
Bin Laden referred to this group of financial angels as his "Golden
Additional evidence also emerged in 2002 during Operation Green Quest, a
Treasury Department effort to "disrupt terrorist financing in the
In March of that year, law enforcement officials raided the Herndon,
Virginia offices of the SAAR Foundation "an Al Rajhi-related
entity." Indeed, the name "SAAR" was an acronym for the
organization's founder, Sulaiman Abdul Aziz Al Rajhi, the controlling
partner of the Al Rajhi Bank.
Subcommittee investigators commented that "one of the 20 handwritten
names in the Golden Chain document identifying al Qaeda's early key
financial benefactors is Sulaiman bin Abdul Aziz Al Rajhi, one of Al
Rajhi Bank's key founders and most senior officials."
An affidavit supporting the search warrants "detailed numerous
connections between the targeted entities and Al Rajhi family members and
related ventures. The affidavit stated that over 100 active and defunct
nonprofit and business ventures in Virginia were part of what it
described as the 'Safa Group,' which the United States had reasonable
cause to believe was 'engaged in the money laundering tactic of
'layering' to hide from law enforcement authorities the trail of its
support for terrorists."
Green Quest investigators were particularly keen on unraveling links
between the SAAR Foundation and the Swiss Al Taqwa Bank, incorporated in
the Bahamas in 1988 for "tax purposes."
Founded by Swiss Nazi sympathizer and convert to Islam, Albert Armand
(Achmed) Huber, who professed admiration for both Adolph Hitler and Osama
bin Laden, the bank was accused by U.S. officials in helping al Qaeda
launder funds. Although the Treasury Department froze its assets in 2001,
the investigation was shut down by the Bush administration before deeper
linkages could be fully uncovered.
In 2011, a lawsuit was filed by insurance giant Lloyd's of London against
Saudi Arabia which sought to recover pay outs to victims of the 9/11
attacks. The suit noted "that two individuals who were former
executives at Bank al Taqwa, Ibrahim Hassabella and Samir Salah, were
also associated with the SAAR Foundation."
At the time, The Independent reported that the legal claim suggested that
defendants "'knowingly' provided resources, including funding, to
al-Qa'ida in the years before the attack and encouraged anti-Western
sentiment which increased support for the terror group."
According to court briefs, "Absent the sponsorship of al-Qa'ida's
material sponsors and supporters, including the defendants named therein,
al-Qa'ida would not have possessed the capacity to conceive, plan and
execute the 11 September attacks. The success of al-Qa'ida's agenda,
including the 11 September attacks themselves, has been made possible by
the lavish sponsorship al-Qa'ida has received from its material sponsors
and supporters over more than a decade leading up to 11 September
Senate investigators, citing Green Quest and Lloyd's case files, noted
that "Mr. Hassabella was a former secretary of al Taqwa Bank and a
shareholder of SAAR Foundation Inc. Mr. Saleh was a former director and
treasurer of the Bahamas branch of al Taqwa Bank, and president of the
Piedmont Trading Corporation which was part of the SAAR network. The U.S.
Treasury Department has stated: 'The Al Taqwa group has long acted as
financial advisers to al Qaeda, with offices in Switzerland,
Liechtenstein, Italy and the Caribbean.' Regarding Akida Bank, the
lawsuit complaint alleged that Sulaiman bin Abdul Aziz Al Rajhi was 'on
the board of directors of Akida Bank in the Bahamas' and that 'Akida Bank
was run by Youssef Nada, a noted terrorist financier'."
The report went on to state that "HSBC was fully aware of the
suspicions that Al Rajhi Bank and its owners were associated with
terrorist financing, describing many of the alleged links in the Al Rajhi
Bank client profile."
As icing on the cake, a 2007 study published by the Congressional
Research Service (CRS) also found that "Saudi individuals and other
financiers associated with the Golden Chain enabled bin Laden and Al
Qaeda to replace lost financial assets and establish a base in
Afghanistan following their abrupt departure from Sudan in
Assets I might add, that were used to bankroll the 9/11 attacks.
'Keen to maintain the relationships'
HSBC's dubious links to the Al Rajhi Bank didn't end with information
discovered in the "Golden Chain" files; it fact, they were the
tip of the proverbial iceberg.
After 9/11, the FBI reported that three of the hijackers, Hani Hanjour,
Nawaf Alhazmi and Abdulaziz Alomari cashed thousands of dollars in
travelers checks and received wire transfers from an unnamed individual
drawn on accounts at the Al Rajhi Bank.
As researcher Kevin Fenton pointed out in Disconnecting the Dots, links
among most of the hijackers were discovered through their banking
transactions. "In this context," Fenton wrote, "it is
worth noting that Global Objectives, a British banking compliance
company, identified fifteen of the nineteen hijackers as high-risk
individuals and established database profiles for them before the
attacks. ... The list of high-risk people maintained by Global Objectives
was available to dozens of banks," a list that presumably also
While there is no evidence that HSBC, or for that matter the Al Rajhi
Bank, had prior knowledge of the 2001 atrocity, the gross indifference
exhibited by these institutions through their violation of "know
your client" (KYC) rules governing financial transactions reveal a
callous disdain for elemental norms as they raced to inflate their
balance sheets come hell or high water.
Privileged communications amongst senior staff revealed they were well
aware of the issues and risks involved, yet did worse than nothing, they
lobbied that HSBC continue their arrangements with the Al Rajhi
Suspicions were such that senior staff "classified Al Rajhi Bank as
a 'Special Category of Client' (SCC), its highest risk designation."
This was done, Senate investigators noted, because the Kingdom was
considered a "high risk country" and due to the fact Al Rajhi's
largest shareholder, Sulaiman bin Abdul Aziz Al Rajhi was considered
"a Politically Exposed Person (PEP)."
Internal HSBC documents also revealed that in 2002, that is, after the
9/11 provocation, "the International Private Banking Department
asked to transfer [several] accounts to HSBC's Institutional Banking
Department in Delaware which had superior ability to monitor account
In fact, transferring Al Rajhi accounts to the bank's Delaware division
would have just the opposite effect and bank officials knew it.
As journalist Nicholas Shaxson noted in his exposé of offshore banking,
Treasure Islands, "Delaware is the biggest state provider of
offshore corporate secrecy." Shaxson pointed out that Delaware's
Chancery Court has a "'business judgement rule' under which courts
should not second-guess corporate managers," thereby "granting
corporate bosses extraordinary freedoms from bothersome stockholders,
judicial review, and even public opinion."
So much for any alleged "superior ability to monitor account
HBUS's Joseph Harpster wrote an email, stating: "The most recent
concern arose when three wire transfers for small amounts ($50k, $3k and
$1.5k) were transferred through the account for names that closely
resembled names, not exact matches, of the terrorists involved in the
9/11 World Trade Center attack. ... The profile of the main account
reflects a doubling of wire transfer volume since 9/01, a large number of
travelers checks but with relatively low value and some check/cash
deposits. According to the account officer, traffic increased because
they have chosen to send us more business due to their relationship with
Saudi British Bank and the added strength of HBC versus Republic. ...
Maintaining our business with this name is strongly supported by David
Hodghinson of [Saudi British Bank] and Andre Dixon, Deputy Chairman of
[HSBC Bank Middle East]. Niall Booker and Alba Khoury [of HBUS] also
Aside from adverse publicity, the "low value" of the
transactions seemed not to have troubled Harpster or his associates in
the least. After all, the total "cost" of murdering 3,000 human
beings were certainly small compared to the price of a vacation home in
the Hamptons or a new Maserati.
Anxious there might be increased scrutiny from regulators (no worries
there!), Harpster's email was forwarded by Douglas Stolberg, the head of
Commercial and Institutional Banking to Alexander Flockhart, then a
senior executive in Retail and Commercial Banking at HBUS. Stolberg
noted: "As we discussed previously, Compliance has raised some
concerns regarding the ongoing maintenance of operating/clearing accounts
for Al Rajhi group." He forwarded recommendations on how to handle
the account: "Retain [International Private Banking] as the
relationship manager domicile for continuity purposes, and as we
understand there is interest in further developing private banking
business with family members. ... Domicile the actual accounts with
Delaware where HBUS's most robust account screening capabilities
"Screening capabilities" which could be shielded from nosy
regulators due to Delaware's strict bank secrecy laws.
Stolberg went on to state: "[T]his has become a fairly high profile
situation. Compliance’s concerns relate to the possibility that Al
Rajhi's account may have been used by terrorists. If true, this could
potentially open HBUS up to public scrutiny and/or regulatory criticism.
SABB [Saudi British Bank] are understandably keen to maintain the
relationships. As this matter concerns primarily reputational and
compliance risks, we felt it appropriate for SMC [Senior Management
Committee] members to be briefed ... so that they may opine on the
acceptability of the plan. Please advise how you would prefer us to
proceed." (emphasis added)
According to Senate staff, "Mr. Harpster reported a week later that
Mr. Flockhart had decided to transfer the accounts to HBUS in the
But HSBC weren't the only entities hoping to curry favor with the
Kingdom. A 2009 Government Accountability Office (GAO) report went on to
note that "certain performance targets set by the State Department
had been dropped in 2009, such as the establishment of a Saudi Commission
on Charities to oversee actions taken by Saudi charities abroad as well
as certain regulations of cash couriers."
Although GAO "recommended that the United States reinstate the
dropped performance targets to prevent the flow of funds from Saudi
Arabia 'through mechanisms such as cash couriers, to terrorists and
extremists outside Saudi Arabia,' the State Department's "most
recent annual International Narcotics Control Strategy Report contains no
information about Saudi Arabia's anti-money laundering or terrorist
One reason why the State Department's report contains "no
information" just might be the Obama administration's policy of
supporting Saudi-backed Salafi terrorists soon to come online in Libya
and Syria, financed through "Saudi charities abroad" or more
directly through "cash couriers."
'You'd better be making lots of money!'
The Senate disclosed that HSBC "provided Al Rajhi Bank with a wide
range of banking services, including wire transfers, foreign exchange,
trade financing, and asset management services."
"In the United States," investigators learned that "a key
service was supplying Al Rajhi Bank with large amounts of physical U.S.
dollars, through the HBUS U.S. Banknotes Department."
"The physical delivery of U.S. dollars to Al Rajhi Bank was carried
out primarily through the London branch of HBUS, often referred to
internally as 'London Banknotes'."
Indeed, "HBUS records indicate that the London Banknotes office had
been supplying U.S. dollars to Al Rajhi Bank for '25+ years.' In addition
to the London branch, HBUS headquarters in New York opened a banknotes
account for Al Rajhi Bank in January 2001. The U.S. dollars were
physically delivered to Al Rajhi Bank in Saudi Arabia."
"On one occasion in 2008," Senate staff reported, the head of
HSBC Global Banknotes Department told a colleague: 'In case you don't
know, no other banknotes counterparty has received so much attention in
the last 8 years than Alrajhi.' Despite, in the words of the KYC client
profile, a 'multitude' of allegations, HSBC chose to provide Al Rajhi
bank with banking services on a global basis."
Even though the Al Rajhi Bank "had not been indicted, designated a
terrorist financier, or sanctioned," HSBC's Group Compliance section
recommended that affiliates should sever their ties.
After that initial decision however, "HSBC affiliates disregarded
the recommendation and continued to do business with the bank, while
others terminated their relationships but protested HSBC's decision and
urged HSBC to reverse it."
Complaints by lower level staff continued, disregarded by higher-ups,
even though a U.S. indictment was issued in February 2005 for two
individuals "accused among other matters, of cashing $130,000 in
U.S. travelers cheques at Al Rajhi Bank in Saudi Arabia" and then
smuggling the cash to CIA-backed terrorists in Chechnya.
Although internal bank documents showed that officials decided to cut
their ties to the Saudi financial institution, they reversed themselves
when pressure was brought to bear by Al Rajhi officials. Between 2006 and
2010, Al Rajhi received shipments totaling more than $1 billion in
physical cash in the lucrative banknotes business from HSBC's U.S.
affiliate according to investigators. Officials at the Saudi bank
"had threatened to pull all of its business from HSBC if the U.S.
banknotes business were not restored."
Senate staff reported that on January 4, 2005, "HBUS AML Compliance
head Ms. Pesce sent an email to Daniel Jack, an HBUS AML Compliance
Officer who often dealt with the London Banknotes office, instructing him
to: '[p]lease communicate that Group Compliance will be recommending
terminating the Al Rajhi relationship.' Mr. Jack inquired as to when that
recommendation would be made. She responded: 'I expect to see an email
from Susan Wright today. She tells me that HBME [HSBC Bank Middle East]
does not agree with Compliance and will not be terminating the
relationship from the Middle East, but she/David B[agley] recommend that
in light of US scrutiny, climate, and interest by law enforcement, we in
the US sever the relationship from here'."
At the time, Susan Wright was "the Chief Money Laundering Control
Officer for the entire HSBC Group. She reported to David Bagley, head of
the HSBC Group's overall Compliance Department."
Senate investigators noted that the "documents do not explain why
HSBC Middle East disagreed with the decision or why it was allowed to
continue its relationship with Al Rajhi Bank, when HSBC's Group
Compliance had decided to sever the relationship between the bank and
other HSBC affiliates due to terrorist financing concerns."
It soon became clear however, that "HSBC Group Compliance began to
narrow its scope." Shortly thereafter a trader in the Banknotes
department wrote, "for us is business as usual." Alan Ketley,
HBUS AML Compliance Officer commented on the decision not to include Al
Rajhi Trading in their earlier decision to sever all ties: "Looks
like you're fine to continue dealing with Al Rajhi. You'd better be
making lots of money!"
Meanwhile, "Al Rajhi Bank communicated the threat to 'pull any new
business with HSBC' unless given a 'satisfactory explanation' why HSBC
had stopped supplying it with U.S. dollars via its relationship
managers," the Senate disclosed.
In short order, it was business as usual.
Despite continuing allegations of terrorist financing swirling around Al
Rajhi Bank, HBUS "continued to supply, through its London branch,
hundreds of millions of U.S. dollars to Al Rajhi Bank in Saudi Arabia. In
addition, at Al Rajhi Bank's request, HBUS expanded the relationship in
January 2009, by authorizing its Hong Kong branch to supply Al Rajhi Bank
with non-U.S. currencies, including the Thai bat, Indian rupee, and Hong
Kong dollar." (emphasis added)
When concerns were raised internally once again, Christopher Lok, the
head of HSBC's Global Banknotes Department in New York fired back:
"This is an on-going debate that will never go away. My stance
remains the same, i.e. until it[']s proved we cannot simply rely on the
Wall Street Journal['s] reports and unconfirmed allegations and 'punish’
Needless to say, Hong Kong's "arrangement" with Al Rajhi went
Despite "troubling information" which should have led to HSBC's
quick exit from the banknotes market, the Senate reported that "HBUS
continued to supply U.S. dollars to the bank, and even expanded its
business, until 2010, when HSBC decided, on a global basis, to exit the
U.S. banknotes business."
• • •
In conclusion, one needn't be a "conspiracy buff" to posit a
link from HSBC to Al Rajhi to "cash couriers" operating across
the Middle East in support of a multitude of U.S.-Saudi-backed
"regime change" gambits in play today; policies which
"worked marvelously well in Afghanistan against the Red
As investigative journalist Ed Vulliamy pointed out in The Observer, the
issues involved here are wider than drug money laundering or terrorist
finance. "It is about where banks, law enforcement officers and the
regulators--and politics and society generally--want to draw the line
between the criminal and supposed 'legal' economies."
Commenting on the HSBC scandal, Robert Mazur, a former Customs Department
deep-cover specialist and author of The Infiltrator, who penetrated
Medellín cartel money laundering operations during the prosecution and
collapse of BCCI in 1991, told The Observer that "the only thing
that will make the banks properly vigilant to what is happening is when
they hear the rattle of handcuffs in the boardroom."
"The stark truth is," Vulliamy wrote, "the notion of any
dichotomy between the global criminal economy and the 'legal' one is
fantasy. Worse, it is a lie. They are seamless, mutually
interdependent--one and the same."