HomeNewsBriefHSBC, Shell Implicated in Argentina Money Laundering Scandal
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HSBC, Shell Implicated in Argentina Money Laundering Scandal

ARGENTINA / 15 JUL 2014 BY MIMI YAGOUB EN

Authorities in Argentina have warned of possible money laundering by HSBC bank in a case involving Anglo-Dutch oil and gas company Shell -- the latest in a long line of accusations of the bank's involvement in financial crime.

According to a report sent from Argentina's Financial Information Unit (UIF) to the country's economic criminal justice department, a suspect currency exchange transaction made on Argentina's state controlled exchange market netted the bank a profit of over $1.3 million, reported Infojus Noticias.

On January 23 this year, HSBC sold Shell dollars at a rate 20 percent above the exchange rate, at 8.7 Argentine Pesos rather than the state fixed market rate of 7.2. The exchange earned HSBC just over $8 million rather than close to $6.7 million, say the UIF.

Shell failed to report what was ostensibly an irregularity that caused huge losses, then made several similar transactions with other banks that same day, according to the UIF.

The report called for the case to be investigated as money laundering as if there is any evidence of collusion on the deal then it would mean the potentially ill-gotten money could have been re-invested in new transactions carried out by the bank."

InSight Crime Analysis

The imposition of state controlled exchange rates offers a wealth of criminal opportunities. This can range from the sort of contraband operations seen in Venezuela, where price and currency controls have fuelled a boom in the smuggling of all manner of goods into neighboring Colombia or visa versa, to the type of white collar crime Argentina's UIF is investigating.

SEE ALSO: Coverage of Money Laundering 

The accusations that HSBC are involved in this are just the latest in a long series of criminal scandals involving the bank, which has been implicated in numerous money laundering cases linked to the drug trade. In 2012, US courts handed HSBC 1.92 billion fine for allowing Colombia's now-defunct Norte del Valle Cartel (NDVC) and Mexico's Sinaloa Cartel to launder $881 million. The following year, Argentina launched its own investigation into the bank, which it accused of money laundering and tax evasion.

Shell too has been implicated in money laundering cases, with the company's dealings with shady figures in Nigeria falling under the scrutiny of UK police in 2013.  

However, neither company has faced criminal charges, with HSBC rumored to have escaped criminal prosecution because federal prosecutors decided the economic impact would be too great. This latest case raises the possibility of HSBC finally facing a criminal prosecution, although the prospect remains distant with numerous practical, political and economic obstacles to clear first.

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