HSBC's Haunting Misdeeds Leaked



On Monday, (21/9) HSBC shares plunged to their lowest since 1995, drastically falling by 5.3 percent in Hong Kong, closing at HK$29.30. Similar to the case in Hong Kong, the severity in London was even worse with a drop of 6 percent. The cause for the fall is mainly due to the rise of controversial leaks regarding the company’s actions. The downfall was triggered by several factors, first of which was due to the presence of the company’s fragile state in China after the rise of mass layoff plan and the rumored collusion with US against Huawei. The situation worsened later on, following the abrupt news that sprung from a document titled FinCEN Files. The document detailed HSBC’s and other world banks' inability to halt the worldwide spread of illicit money amounting up to $80 million owned by supposed criminals. In 2013 and 2014, Britain's largest bank moved the illicit money through its US business to HSBC accounts in Hong Kong. The files showcased that the problem rose after the bank was fined $1.9bn (£1.4bn) in the US over money laundering. The fraud that occurs is said to be similar to a Ponzi scheme, an investment fraud in which clients are promised big profits without risk. Apart from the two aforementioned causes, HSBC is currently experiencing a difficult time as they’re hanging on a thin thread amidst the global recession, trade tensions between the US-China and also the political storm in Hong Kong.


Apart from HSBC bank, other banks are known to be problematic as well. Through FinCEN files, documents that involve transactions of around US$2 trillion have leaked. These files reveal how some of the biggest banks in the world allow criminals to move illegal proceeds around the world. Citing the BBC, the FinCEN files contain more than 2,500 documents, most of which are files that banks sent to US authorities between 2000 and 2017. These files raise concerns about what their clients might do, which contain some of the international banking system's most closely guarded secrets. Banks utilize these files to report dubious conduct; however, they are not proof of wrongdoing or crime. According to Fergus Shiel, Project Manager and Editor of The International Consortium of Investigative Journalists (ICIJ), the leaked files were an "insight into what banks think about the tremendous progressions of grimy cash over the globe.". Besides the HSBC case, there are also other cases revealed by FinCEN, one from JP Morgan, which allowed a company to move over US$1 billion through a London account without knowing who owned it. Another file implicates Barclays Bank in London, that was used by one of Russian President Vladimir Putin's closest associates to evade sanctions intended to stop him from using financial services in the West. And another was the case with Deutsche Bank, which moved money launderers' dirty money for organized crime, terrorists, and drug traffickers.


In light of the FinCEN controversy, several big banks' stock prices plunged as suspicions of money laundering emerged. On Monday (21/9), Deutsche Bank's stock dropped 1.62% to $9.09, JP Morgan's stock declined by 0.21% to $98.35. Meanwhile, Standard Chartered's stock nosedived at a staggering 5.2% to £340.70. Exchanges worldwide were also affected, as the Dow Jones dropped 0.88%, S&P 500 dropped 1.21%, not to mention the Nasdaq Composite plummeted 1.07%. On top of that, negative sentiments towards big banks from the global exchanges might also derange the local market. On Monday (21/9), Jakarta Composite Index (JCI) plunged 1.19% to 4,996.36, caused by the drop of banks share prices apart from HSBC. Namely, PT Bank Central Asia, Tbk's share price dropped 1.61%, PT Bank Rakyat Indonesia dropped 2.51%, and PT Bank Mandiri dropped 2.74%. The weakening continued until the close of trading on Wednesday (9/23), as JCI fell by 0.33% to the level of 4,917.95. Although market corrections have reduced as global markets have started to rebound, this controversy indeed took a major hit on global exchanges worldwide.


Sources:

CNBC Indonesia

BBC News Indonesia

CNN Indonesia


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