A reader of our site sent us a piece posted last month in Courthouse News Service involving a fellow in South Florida who filed a suit against his former employer, HSBC Bank. The former HSBC Senior Vice President says he repeatedly warned Miami bank officials of various unlawful transactions involving Cuba and Iran that should not have been processed. What happened? He claims he was ignored and fired.
According to the complaint, in a meeting with federal auditors bank officials argued that certain transactions were allowed because the holding HSBC account was a non-U.S. entity. Apparently large sums of money were being transferred through this account – the “CM” account – with no apparent business purpose and that there were ties to Iran and Cuba.
There is the perfunctory he said, she said peppered throughout the complaint. In the end, it seems that some bank officials did not want to sacrifice big accounts on the possibility that there could be a violation of U.S. sanctions regulations. There is a similar tale in the complaint about other transactions involving Cuba – the “CC” account. Seems like the former ex-HSBC official knew a thing or two about facilitation and just common sense.
On the other hand, there are cases where the underlying transaction may be prohibited but there is no “blockable” interest; however, even taking these matters on a case by case basis, at least in the case of Cuba, it seems there was enough information in this case to block and report the transaction to the Treasury Department, Office of Foreign Assets Control. In the case of Iran, a little more information is needed since Iranian accounts are “restricted” and the sanctions are different from the Cuba program.
Anyhow, the case makes for good reading. I lived in South Florida before moving to the DC Metro area in the 1990s and, even back then, every now and then there would be stories about money laundering or unlawful transfers of funds for all sort of persons and organizations from throughout the Americas. Miami and moving funds for rogue regimes, unfortunately, is not too far-fetched. At least in this case, they may have been using a bank and not another Maletinazo.
The Cuban regime routinely uses South Florida financial institutions to launder money. So if you are a financial institution, or even a money transfer service, you need to pay close attention to processing transactions in that market. If even half of this case pans out as true, HSBC Bank corporate officials may have a lot more on their hands than a disgruntled employee.
Read the Courthouse News Service story and the complaint, here.