Senate report on HSBC cites lax safeguards in Miami

London-based HSBC not only did business with firms linked to terrorism and let money-laundering safeguards in its Mexico operations erode, but also had lax adherence to those safeguards in Miami, as outlined in a 335-page Senate report issued earlier this week.

“The neglect and nonfeasance of regulatory agencies is the soft underbelly of the financial crime wave in the U.S., ” said Charles Intriago, president of the Miami-based Association of Certified Financial Crime Specialists, which has been covering the role of big banks in fostering financial crimes.

Among the issues cited in the report released by the Senate’s Permanent Subcommittee on Investigations, were the bank’s issuance of “bearer share accounts.” HSBC’s U.S. operations opened more than 2,000 accounts in the name of bearer share corporations, a notorious type of corporation that invites secrecy and wrongdoing by assigning ownership to whomever has physical possession of the shares, according to the report.

At its peak, HSBC’s Miami office had more than 1,670 bearer share accounts; the New York office had more than 850; and the Los Angeles office had at least 30. The Miami bearer share accounts alone held assets totaling an estimated $2.6 billion and generated annual bank revenues of $26 million. Multiple internal audits and regulatory examinations criticized the accounts as high risk and advocated that HSBC either take physical custody of the shares or require the corporations to register the shares in the names of the shareholders, but the bankers initially resisted tightening anti-money laundering controls and regulators took no enforcement action, the Senate report said.

In a local example of the risks the accounts posed, Miami Beach hotel developers, Mauricio Cohen Assor and Leon Cohen Levy, father and son, used bearer share accounts they opened for Blue Ocean Finance Ltd. and Whitebury Shipping Time-Sharing Ltd. to help hide $150 million in assets and $49 million in income, according to the Senate report. In 2010, both were convicted of criminal tax fraud and filing false tax returns, sentenced to 10 years in prison, and ordered to pay back taxes, interest and penalties totaling more than $17 million.

HSBC has since reduced its bearer share accounts to 26, most of which are frozen, while at the same time maintaining a policy that allows the bank to open new bearer share accounts in the future.

Read more Breaking News stories from the Miami Herald

  • Judge orders Coconut Grove salon to give authorities name of groping victim

    A Miami-Dade judge on Friday ordered an upscale Coconut Grove salon to reveal to authorities the name of a woman who complained she was sexually assaulted by a massage therapist.

This photo provided on Friday, July 25, 2014,  by the Burkina Faso Military shows the site of the plane crash in Mali. French soldiers secured a black box from the Air Algerie wreckage site in a desolate region of restive northern Mali on Friday, the French president said. Terrorism hasn't been ruled out as a cause, although officials say the most likely reason for the catastrophe that killed all onboard is bad weather. At least 116 people were killed in Thursday's disaster, nearly half of whom were French.

    Black box found at Air Algerie wreckage site

    French soldiers recovered a black box from the Air Algerie wreckage site in a desolate region of restive northern Mali on Friday, officials said. Terrorism hasn't been ruled out as a cause, although officials say the most likely reason for the catastrophe that killed all 118 people onboard is bad weather.

Speaker of the House John Boehner, R-Ohio, talks with reporters about the border crisis, veterans' health care, and future funding, on Capitol Hill in Washington, Thursday, July 24, 2014. House Republicans and Senate Democrats are at an impasse on dealing with tens of thousands of young migrants showing up at the southern border, leaving any solution unclear with Congress' annual August recess looming.

    Obama to urge Central American leaders for help

    President Barack Obama was meeting with Central American leaders Friday to urge them to help slow the exodus of unaccompanied children from their countries, as House Republicans tried to get behind a solution to the crisis at the U.S.-Mexico border.

Miami Herald

Join the

The Miami Herald is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere on the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

The Miami Herald uses Facebook's commenting system. You need to log in with a Facebook account in order to comment. If you have questions about commenting with your Facebook account, click here.

Have a news tip? You can send it anonymously. Click here to send us your tip - or - consider joining the Public Insight Network and become a source for The Miami Herald and el Nuevo Herald.

Hide Comments

This affects comments on all stories.

Cancel OK

  • Marketplace

Today's Circulars

  • Quick Job Search

Enter Keyword(s) Enter City Select a State Select a Category