Posts Tagged ‘Senate’

h1

HSBC flouted warnings, cozied up to IBBL

July 20, 2012

A report by the U.S. Senate has documented extensive ties between HSBC and Islami Bank Bangladesh Limited (IBBL), the biggest sharia bank in Bangladesh.  HSBC engaged in business activity with the Bangladeshi financial institution despite ample evidence of IBBL facilitating terrorist financing.

As previous Money Jihad coverage has shown, IBBL helped bankroll the dangerous spread of Wahhabi Islam in Bangladesh.  Last year, IBBL was also named by its own government for diverting zakat to fund militant jihad, and one of its sharia board advisers was arrested an interrogated for an attack against police officers.  And that was without even knowing the contents of this report, which are quite damning.

IBBL remains one of the world’s worst examples of the nexus between sharia finance and terror finance.  But HSBC didn’t seem to mind too much.

From Wednesday’s Daily Star:

Terror financed due to HSBC failure

US probe into British bank’s operation in Bangladesh exposes links of 2 local Islamic banks

Terror sharia bank worked closely with HSBC

Islami Bank Bangladesh Ltd and Social Islami Bank Ltd came into the spotlight yesterday for their alleged links to terrorist financing after a US Senate report exposed British banking giant HSBC’s internal governance failure to control flows of suspect funds.

Click here to read Full Text of US report

One of the banks was allegedly funding al-Qaeda, and Osama bin Laden’s brother-in-law held shares in a company that has shares in the bank.

In all these cases, profit motive rather than cautions from various levels within the bank and standard procedures ruled the game.

More thoughts were given to the bank’s making $47,000 in revenue that might go up to $75,000 a year later than to the terrorist links the banks allegedly had, or the US authorities’ view of the banks.

A report of the US Senate Permanent Subcommittee on Investigations, a congressional watchdog panel, has revealed these troubling information which show a “pervasively polluted” culture at HSBC Holdings Plc.

The bank acted as financier to clients seeking to route shadowy funds from the world’s most dangerous and secretive corners, including Mexico, Iran, Saudi Arabia and Syria, according to the report.

The US report also mentioned that Al Rajhi Bank, a Saudi bank, was involved in suspicious transactions.

HSBC apologised to the US Senate, saying it takes “compliance with the law, wherever it operates, very seriously”.

In one instance, when Islami Bank wanted to open a US dollar account with the HSBC US office, questions were raised about the Saudi bank Al Rajhi’s 37 percent ownership in Islami Bank. Ears of HSBC’s anti-money laundering unit were cocked.

But the then head of HSBC Global Banknotes, Chris Lok, felt that his interest in considering a new account depended upon whether there was enough potential revenue to make.

“Is this an account worth chasing….How much money can you expect to make from this name? It’s just that if the revenue is there then we are prepared for a good fight,” he wrote. “The money is there and we should go for this account.”

“Then Lok and others approved the account despite questions about its [Islami Bank] primary shareholder Al Rajhi Bank, whose past links to terrorist financing had received attention in the media …and troubling information about Islami Bank itself,” the senate report said.

HSBC’s own Financial Intelligence Group (FIG) unit had reported that Shaikh Abdur Rahman, chief of Bangladesh’s terrorist outfit JMB, had an account with Islami Bank. Bangladesh Bank found that two branches of Islami Bank had been engaged in “suspicious transactions” and urged the bank to take action against 20 bank employees for failing to report the suspicious transactions, according to the FIG report.

Six top militants including JMB chief Abdur Rahman and his deputy Siddiqul Islam alias Bangla Bhai were executed for killing two Jhalakathi judges in 2007.

HSBC’s Know Your Customer unit had reported that Islami Bank be classified as a highest risk client but HSBC rejected the suggestion. It meant HSBC did not subject the bank to any enhanced monitoring.

HSBC’s another internal report said a Saudi NGO, International Islamic Relief Organisation (IIRO), had been implicated in terrorist financing by the US government and included on the list of those prohibited to do business in the US. The IIRO had accounts with both Islami Bank and Social Islami Bank, and yet HSBC’s Compliance Department denied an internal request of due diligence on the bank.

“Today, although HSBC exited the US banknotes business in 2010, Islami Bank remains a customer of two dozen HSBC affiliates,” the report said.

Read the rest of this entry ?

Advertisements
h1

HSBC could face billion dollar fine

July 17, 2012

HSBC officials will appear before a U.S. Senate committee hearing today.  Analysts expect “a withering review of problems at HSBC and transactions tied to Iran, terrorist financing and drug cartels, according to people familiar with a report the panel has drafted on its investigation.”  ING was recently fined $600 million for similar misbehavior, and IBTimes is predicting the fine for HSBC could be as high as $1 billion:

h1

Obama flunkies doublecross Senate on sanctions

December 4, 2011

Sen. Bob Menendez (D-NJ) wanted a tougher set of sanctions against Iran, particularly against the Central Bank of Iran and any foreign banks still doing business with it.  Pres. Obama’s underlings objected, saying it would restrict oil sales by Iran and increase the international price of oil, damage the world economic recovery, and turn off our allies who supposedly (contrary to all recent evidence) support a slower approaching to sanctions tightening.  But the underlings claimed that they shared the same goal as Sen. Menendez, and would work with him to develop a compromise acceptable to the White House.

So people like David S. Cohen, Treasury undersecretary for terrorism and financial intelligence, worked diligently over the last couple weeks to water down the amendment to the defense authorization bill that Menendez and Republican Sen. Ron Kirk jointly proposed.  Once Obama’s Treasury and State officials had forced a significant number of exceptions, waivers, and escape clauses into the amendment, Sen. Menendez thought the legislation was ready for bipartisan support in the Senate and support by the Obama administration.

Suddenly, during a Senate foreign relations committee hearing on Dec. 1, the Obama bureaucrats pulled the rug out from under Sen. Menendez, and came out against even the watered down financial sanctions.  The video from an impassioned Sen. Menendez is a must-watch for insight into how this administration behaves:

Immediately after Sen. Menendez finished his remarks about the bureaucrats “vitiating” the amendment, Sen. John Kerry quipped that they didn’t vitiate it, they villified it.  With that, the Obama flunkies had succeeded in alienating Senate Democrats on this matter, who then defied the White House and joined with Republicans to approve the amendment by a vote of 100 to zero.

The president will veto the bill over an unrelated matter, further delaying stronger sanctions.

Meanwhile, allies who supposedly want to move slower, like France, are pushing for a blanket oil embargo on Iran.  The officials at Treasury constantly try to convince the public that Iran faces enormous pressure from existing sanctions, and Mr. Cohen always trots out some graph depicting the falling market value of the Iranian rial against the U.S. dollar.  Sir, if a nuclear bomb lands on Tel Aviv, will you still be lecturing us on the great job Treasury did at weakening the Iranian rial?

h1

More Iran sanction wind whistling

November 10, 2011

The normally reticent director of OFAC, Adam Szubin, has written a blog post about Iran sanctions on the U.S. Treasury Department’s website.  The post accompanied Treasury’s designation of six front companies that own more vessels from Iran’s maritime fleet (IRISL), and Szubin dubiously claimed that “IRISL’s days may be numbered.”

Szubin also linked to a somewhat disorienting Treasury graphic to show the measures Iran has taken to conceal the true identity and ownership of its vessels:

Iran exploits Isle of Man & Panama

At any rate, the post highlights Treasury’s desire to demonstrate that the Obama administration’s sanctions on Iran are “tough” and “smart,” although critics have pointed out that sanctions against Iran have done little to deter Iranian nuclear advances.

During his opening statement at a Senate hearing last month, Banking Committee ranking minority member Sen. Shelby (R-AL) levied a scathing review of the sanctions strategy:

Despite 30 years of progressively more stringent economic sanctions, Iran remains one of the more serious threats to the national security of the U.S. and our allies. Iran continues to support authoritarian regimes, terrorist organizations and radical militias in Iraq and Afghanistan. For allies such as Israel… Iran’s threat to its very existence is real, continues unabated, and cannot be ignored.

More than one year has passed since Congress, the UN, and many of our allies levied the most recent round of sanctions against Iran in an attempt to derail Iran’s efforts to obtain nuclear weapons. Unfortunately, the heightened sanctions have not yet produced any significant change in Iran’s behavior regarding its nuclear program, international terror, or its record on human rights.

One problem is that the White House and the State Department have carefully managed to avoid labeling any major Russian, Chinese, or other US-trading partner’s companies as violators of US-mandated sanctions. China, Russia, and others are expanding trade with Iran, continuing to provide it with banking assistance and investing in its energy sector. Additionally, China and Russia have further undermined U.S. sanctions by supporting Iran’s military programs. For sanctions against Iran to be as effective as possible, the Administration needs to do a better job at securing the cooperation of the global community.

h1

Cohen adds Iran sanctions to get promoted

June 30, 2011

According to The Cable, David Cohen’s nomination to become Treasury’s new undersecretary for terrorism and financial intelligence is “back on track.”

Cohen’s nomination had been delayed because of concerns about the Obama administration’s lack of tenacity in enforcing anti-Iran sanctions laws.  Cohen, a former Clinton lawyer with little understanding of terrorist financing methods, responded to the delay by jumping through whatever hoops the Senate created in order to get confirmed.

This included the recent addition of sanctions against ten companies tied to Iran’s nefarious state shipping firm (IRISL) and a designation against Venezuela’s state oil company for selling gasoline to Iran.

But going after IRISL and Chavez wasn’t enough. 

It took sanctions against Iran Air and Tidewater Middle East, Iran’s major airline and port operator, to make Cohen’s final sale to the Senate.  Once those designations were announced, Sen. Ron Kirk wrote:

I applaud Acting Under Secretary David Cohen for moving decisively to designate Iran Air and a major Iranian port operator responsible for facilitating Iran’s illicit transfer of weapons and other proliferation activities. Both designations will significantly restrict shipping to and from Iran and put even more pressure on the Iranian economy.  Under Secretary Cohen has proven himself to be a worthy successor to former Under Secretary Levey. He has my confidence.

Political horse trading is what it is, but Mr. Cohen is still an unwise selection for the post for reasons discussed here.  A positive outcome of the whole seedy transaction is that the sanctions regime, which even Democrat Senator Bob Menendez called a “paper tiger,” has become stronger.

However, the enterprising Avi Jorisch recently noted that the sanctions “are not working” partly because of the large number of loopholes in the sanctions regime against Iranian banks that are involved with funding Iran’s nuclear program.  Specifically, Europe allows pre-existing bank relationships to continue, and only prohibits new ones.  Jorisch explains:

Unfortunately, many banks continue to do business with Tehran’s illicit financial industry, and this undermines the sanctions effort. Many of Iran’s designated banks, including those named by the United Nations and the European Union, have a number of branches in countries such as China, Russia, Italy, South Korea, France, Iraq, Lebanon, the United Arab Emirates, among others. Indeed, some of America’s closest allies have publicly claimed their support for sanctions, while at the same time, allowed the Iranian regime free access to hard currency and the international financial sector.

Quietly, European policymakers have said that designated branches can continue to operate in their jurisdictions as long as the transactions relate to contracts signed prior to the UN designation. No new business is allowed, not even “getting new phone lines.” Yet in practice, this loophole allows Iranian banks to maintain their business licenses in Europe, and continue to operate as they did before. In other words, as long as Iran signed a contract with a European company the day before UN sanctions were enacted, European officials are willing to look the other way.

Perhaps the Senate should have held out until these loopholes were shored up as well.