A fine for breaking U.S.money laundering laws could not only cost HSBC Holdings more than $1.5 billion, but also cause a huge blemish on their reputation.
The British bank has been under investigation and could face criminal charges in the United States. In July, the bank was condemned for letting their clients shift suspicious funds out of countries such as Iran, Mexico, the Cayman Islands, Saudi Arabia and Syria.
Prosecutors are looking into whether or not the bank failed to monitor its clients’ transactions closely enough, therefore potentially allowing drug dealers and terrorists to move their corrupt money. Prosecutors are also looking into whether HSBC broke the rules by transferring money for countries like Sudan, Iran and North Korea, which needs approval.
“It completely tarnishes their reputation,” sophomore marketing major Monica Lesar said. “Even if these were just accusations, no one is going to want to buy stock or invest in a company that is involved in illegal activity. No one wants to lose their money.”
A settlement with authorities is in the works, but the company could potentially pay the most expensive fine on record for a money laundering case. In order to avoid a formal indictment that could possibly force them out of business, prosecutors will likely be offering a deferred prosecution agreement.
Chief Executive Stuart Gulliver told reporters that some staff had left the firm and others had their pay cut because of the investigation.
“A red flag goes up when you see something like this. It says the company is a risky investment,” Lesar explained.
Dan Hughes, senior business major, agrees with Lesar.
He added, “News like this really stresses the importance of integrity in business practice. Had the bank been more strict with basic compliance issues, it’s much less likely that illegal and reputation harming practices like this would be allowed to occur.”