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Money Laundering, Research Paper Example

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Research Paper

The legal issue highlighted in my chosen article is related to the crime of money laundering. Investopedia (2012) defines money laundering as “The process of creating the appearance that large amounts of money obtained from serious crimes, such as drug trafficking or terrorist activity, originated from a legitimate source” and also explains that international organized crime could not function without money laundering activities.

The law associated with Money Laundering is regulated by the Money Laundering Control Act of 1986. The Money Laundering Control Act of 1986 was passed by the United States Congress to render the laundering of money instruments a Federal crime. The law prohibits financial transactions by individuals generated for unlawful activity with specific intent to conceal such activity (Cassella, 2007).

Article Chosen

The article chosen is entitled “HSBC’s Multiplying Legal Issues” by Henning (2012). The article talks about how banking giant, HSBC, is facing money laundering charges in connection to a whistle-blower’s evidence that thousands of their accounts internationally, and at least 8,000 in New Jersey, are connected to criminals, “terrorist financiers and drug traffickers” (Burghardt, 2012).

It is reported that the New Jersey HSBC branch, alone, is a significant part of the money laundering scheme accusations against the corporation (Henning, 2012). The article also states that investigations on the 8,000 HSBC accounts in New Jersey will be slow, but HSBC has set aside at least $700 million in anticipation of fines and civil penalties likely to be imposed on them when the investigations are complete. However, it is reported that the dollar amount needed to resolve the money laundering case may exceed this. This will have an obvious negative affect on HSBC operations as it relates to its financial position. Additionally, HSBC’s business may be affected in the area of credibility in the eyes of the general public. There are supposed to be numerous checks and balances in place to detect fraudulent activity within any financial institution, and this event is something that can definitely affect HSBC’s business in the area of consumer confidence.

Why This Topic Was Chosen

I chose this topic because I am interested, puzzled and concerned about how this level of fraud could exist and go undetected in a financial institution the size of HSBC. I have an account with HSBC and I’m wondering if I should close it, because of this. It makes one wonder about how secure our funds really are in these financial institutions.

References

Burghardt, T. (2012). HSBC Caught in New Drug Money Laundering Scandal.  Global Research. Retrieved from http://www.globalresearch.ca/hsbc-caught-in-new-drug-money-laundering-scandal/5310397

Cassella, S.D. (2007). Money Laundering. The United States Attorneys’ Bulletin. The Executive Office for United States Attorneys. Retrieved from http://www.justice.gov/usao/eousa/foia_reading_room/usab5505.pdf

Henning, P.J. (2012). HSBC’s Multiplying Legal Issues. The New York Times online. Retrieved from http://dealbook.nytimes.com/2012/11/12/hsbcs-multiplying-legal-issues/

Money Laundering (n.d.). Investopedia.com. Retrieved from http://www.investopedia.com/terms/m/moneylaundering.asp#axzz2CKVxv5mN

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