Where are the criminal convictions for HSBC and Wachovia's money laundering for the Mexican drug cartels? They laundered over $300 Billion USD over the years, and no one went to jail?
To get a criminal conviction, you have to show requisite intent beyond a reasonable doubt. The basis of the HSBC indictment was failure to classify Mexican operations as "high risk" and follow the higher standard for suspicious activity reporting. Maybe negligence, but big leap from there to knowledge or intent. There was some evidence that some people in Mexico may have known, in the abstract, that there as laundering going on. But what was missing was evidence that anyone in the US had actual knowledge of specific illegal transactions. That's what they did have in this case.
I read the indictment in HSBC. They didn't have the kind of spam dunk evidence they would've needed to get convictions in that case. They did here.
IIRC, there was so much cash to move, that the cartel made custom-sized, reusable tote boxes, that fit precisely through the teller windows. To not notice that, when you have continuous video of all teller windows?
Further, bank software makes a distinction between different financial instruments, for instance, if you deposit $8K in cash, or in cheque, or in wire transfer the deposit information will capture that difference.
Even $10 billion in 100s, per year, divided by say 200 days that a bank is open, is $50 million per day. That is, 500,000 x 100 dollar bills, being deposited and counted, each and every day the bank is open.
Does it sound reasonable to you, that their software wouldn't record that, and it would seem shall we say "odd" with even minimal review of their bank branches? It would take multiple tellers an entire shift to count such money.
EDIT to add: even counting 1000 bills per minute with high speed counters, you have 500 minutes, which is 20 minutes more than an 8 hour shift with no break.
IIRC, there was so much cash to move, that the cartel made custom-sized, reusable tote boxes, that fit precisely through the teller windows. To not notice that, when you have continuous video of all teller windows?
When you only hear one side of the story (the US Government's side) it's easy to make a case that sounds damning.
Firstly, it's not like people were turning up at banks with boxes helpfully labelled "DRUG MONEY". The point of money laundering is you have a reasonable explanation for where the cash is coming from. In this case the alledged cartel money was actually from companies that processed remittances. It's not entirely surprising if such companies move large amounts of cash. And having such boxes (probably provided by the bank themselves) would make a lot of sense for any bank with cash heavy clients.
But moreover the US never managed to prove the money actually did come from cartels. Their case amounted to: there's lots of cash moving from Mexico to the USA via HSBC. It must obviously contain drug money. Therefore HSBC is guilty.
There was also a sideshow related to transactions with Iran, caused by the fact that the USA was trying to impose sanctions on Iran globally but many of HSBCs international clients are not (theoretically) under US jurisdiction. Congress took a very strong "you're either with us or against us" line on this and banks (many of them, not just HSBC) got caught in the crossfire.
The fact is that AML laws are so terrible every bank is guilty of violating them. You really cannot run a large bank without having some criminal clients and post PATRIOT Act, that's enough.
> But moreover the US never managed to prove the money actually did come from cartels. Their case amounted to: there's lots of cash moving from Mexico to the USA via HSBC. It must obviously contain drug money. Therefore HSBC is guilty.
Mike, where do you get off? Rather.. where the hell are you coming from? Ad-hominem attacking Shrem for being related to the silk road and laundering money; and in the same thread defending HSBC with disinformation?
What's your angle here.
The case did not amount to anything like that. They were literally removing information on transactions that would warrant scrutiny, among many other things much more damning than 'there was a lot of money'.
Personal anecdote. About eight years ago I knew a guy who had a small diner in Michigan and the weekly deposits came out to be just under $10k, so $8700 this week, $9500 the next week. Nothing nefarious, that's just what it happened to be. I guess after three months of this the bank closed his business' account for "suspicious activity".
They thought he was "structuring". There's a $10k reporting limit for suspicious transactions. So obviously if you are doing something suspicious, you want to always go in under the limit. So now the real limit is lower than $10k and essentially arbitrary .... you really have no idea how you can use a bank account with cash without being classified as suspicious. Great system, huh.
Actually it does sound like a great system to not know exactly what being suspicious looks like. If the system was very precisely defined it would make it trivial for criminals to avoid suspicion by staying just on one side of a line.
So you have these bankers boxes. It's evidence, sure. Now you gotta put someone on the stand to testify about the boxes, and why someone sufficiently high up at HSBC should have known what those boxes meant and ignored it. Beyond a reasonable doubt. You could get that conviction, but you might not. When you're using circumstantial evidence like that, you need a lot of different things that point to the same result. And they didn't have that. It wasn't a slam dunk.
Now, it's imaginable that if the same exact conduct happened with a small company run by an individual, they could've gotten the conviction. The reason is that when dealing with individuals, the alternative explanations are simply less plausible in creating reasonable doubt. It's easy for an HSBC executive to get on the stand and say: we just didn't know about those boxes--we have divisions in 100 countries and move trillions of dollars a year and it never popped up on the radar. With an individual where illegal transactions might be the bulk of the business, as was the case here, those alternative explanations are much less believable.
Because criminal convictions against a major bank could have serious repercussions, probably both in terms of international relations and economically.
In the same spirit - Silkroad the great online evil of the drug trade, had a yearly turnover of less than .1% of the world drug market.
"Little people" are free to be offended when that term is used with respect to them. However they don't get to ban the word 'little' from the english language. The way it was used was perfectly fine and correct.
Financial crimes at this scale are extremely complicated and it's not as straightforward to just say 'send HSBC to jail'. Who's guilty and guilty of what is outside my armchair lawyer knowledge, maybe you are in a better position.
Many people comment like 'law is for small people', etc. But it's just simply not understanding the crime of that nature. Huge money laundering operations are much more complicated than one guy treating bitcoin like monopoly money.
He's lucky he didn't also catch a case for ripping people off through Bitinstant. While no one knows the total of orders that they failed to deliver, it's likely to be in the hundreds of thousands of dollars. A class action suit was filed against the company before it folded. I'm guessing a big chunk of the stolen money went into this guy's pocket.
I'm not sure about that. I don't know the details; but I strongly suspect that while Shrem very likely knew he was laundering 'illegal' money (at least, I think he would have done it whether he knew or not), he was not ripping people off on purpose.
Personally, I find it hard to feel too bad for Shrem; since he was sloppy and loud.. and kind of just had it coming. That being said, I don't think he did anything morally wrong w/r/t what is he is being convicted of.
This is more a case of a bad law and a stupid person than a bad person. In a more reasonable world where people are legally allowed to enter into mutual, private contracts without a nanny state policing people's morals.. what Shrem did could not even be considered a crime.
His fault? sure. Stupid of him? Sure.. but laundering money for drug dealers is not morally reprehensible in its own right (unless they are violent drug dealers); it's just dumb to do in an obvious way with thousands of people watching you (and not even charging a ridiculous mark up!)
The last ~200 pages (like 2,000 posts) of the Bitinstant support thread at Bitcointalk.org before they shut down were essentially all complaints about undelivered orders and excuses by staff, including Charlie Shrem, about why orders weren't being delivered. Things got so bad that they hired someone specifically to respond to complaints in that thread, and then after a month or two he quit.
Right; but they were getting fucked over in the fiat world left and right up until that point too. Not saying they didn't over-promise and under-deliver but you can't really examine these things in a vacuum.
laundering money for drug dealers is not morally reprehensible in its own right (unless they are violent drug dealers);
Given the multiple pending murder-for-hire charges against Ulbricht, I don't think you can use "Silk Road is all about peace and love" as a get out clause here.
Shrem is on record as saying "Let me help you, BTCKing, avoid getting caught because I think Silk Road is cool". Not entirely surprising what the outcome was there ...
I don't see how a state enforcing categorically insane policy, creating inevitable black market, creating an inevitable marketplace, creating an accidental king-pin, who has allegedly committed murder-for-fire has anything to do with the moral ground on which charlie shrem stands with laundering money for a drug dealer.
There are infinite silk roads and infinite drug dealers forever and always so long as drug policy remains like it is. The state itself is far, far more morally culpable for whatever true evil was actually brought on by Ulbricht than Shrem himself is.
So can someone clarify this for me? It sounds like he didn't actually do any money laundering, but sent money on behalf someone who was accused of being a money launderer? 2 years seems pretty harsh for that.
IIRC, Charlie Shrem gave Faiella (BTCKing) explicit instructions on how to avoid the AML rules he was required to enforce as Chief Compliance Officer of BitInstant.
It was harsh, doubly so because nobody at the time knew what the money laundering rules for bitcoin were supposed to be.
They were trying to bring down Silk Road, and this guy was accused of buying/selling bitcoins for a major Silk Road dealer. This isn't about banking, it's about the war on drugs.
I think you are being a bit too charitable. If you send something which is being traded into and out of currency on behalf of someone else, or on your own behalf, you are have to ask the question if this is legitimate or not.
Now if you sell PEZ collectibles on Ebay for others, and find they start sending you back the same collectable you sold before, you have to sit back and ask, Hmm what is really going on here? And if you don't do that, then you risk finding yourself, like Shrem did, in a place which really wasn't a legal place to be. The key here was the judges observation, "months and months" of activity. If you do this and stop for a second and say "Hmm, why is this so profitable for me, what is the deal here?" a couple of weeks in, maybe even a month in, and you document seeking legal advice. Then you get off with a wrist slap. It was like the bitcoin for gift cards site that someone here said was "amazingly profitable", you have to stop and ask yourself where is the "value" here that I'm getting to keep so much of it.
Shrem was the compliance officer for a company and he deliberately broke the company's own compliance policies. He wasn't even trying to follow the law.
It has some. Back in 2011 or so when mtgox/bitinstant were big, none of them really knew what they were supposed to do. Nobody even knew if bitcoin was enough like "money" to qualify under money transmitter laws. The state and federal regulatory agencies didn't know what bitcoin was, and certainly didn't provide any guidance for the exchanges on what they were supposed to do to comply with the law.
Now, we have more regulatory guidance and the exchanges are, by and large, complying with it. The dominant companies are Bitstamp, Coinbase, and Circle, and they are all demanding identification info from their customers and notifying the regulatory bodies of any suspicious activities.
If you deal with legitimate US companies like Coinbase, then yes, it does. Bitcoin is now seen with some degree of legitimacy by the US government and the parts of the US public that are aware of it.
Bitcoin, like anything else built on strong cryptography and/or decentralization (Tor, BitTorrent), is of course still used for nefarious purposes including money laundering and funding of criminal enterprises. But the legitimate use likely outweighs the illicit use. And the bulk of the illicit use is primarily for what I would consider very minor crimes (like buying drugs for recreational use in one's own home).
US dollars are used for illicit purposes, in much greater volume than Bitcoin in its entire history. I don't see how this change anything with bitcoin.
Cash can be easily used to launder, but it has to be done physically and generally requires in-person interaction. Cryptocurrencies can be used to launder but can be done remotely and through various forms of proxied mediums.
But that difference is one caused by all sorts of technological advancements, including completely unrelated advancements, and in my opinion is not a great excuse to preemptively treat the currencies differently. By your same reasoning, the advent of air travel made laundering cash easier.
>By your same reasoning, the advent of air travel made laundering cash easier.
That's true, though. Law enforcement agencies around the world had to account for plane flights as a potential way to trade illicit substances and gains from those substances. They had to hire experts in satellites and radar systems to track air vehicles carrying contraband when necessary.
And the same is true of cryptocurrencies. Law enforcement has to quickly adapt to the new medium and overcome extra hurdles.
I'm not discounting cryptocurrencies or air travel at all, I'm just saying that technological inventions often create many new intended and unintended externalities for all sorts of entities.
This guy doesn't sound too bright. His best plea to the judge was, what, that he could be a motivational speaker for not obviously flaunting AML laws? He really couldn't come up with anything better than that?
Yet people here keep defending these ridiculous charges because they "don't matter", and "aren't real anyway". Yeah, tell that to the person that had to hear that charge and then got scared shitless into accepting "only 2 years" of prison time.
