Assuming Loretta Lynch is confirmed as the next US Attorney General—a scenario that looks likely at this point–she may have to immediately back up promises she made during her confirmation hearing, and take on a misbehaving bank that has already defied her once before.
When banking giant HSBC was fined $1.9 billion for laundering drug money and violating economic sanctions, the company agreed to system-wide reforms in order to avoid prosecution. That agreement was approved by Loretta Lynch, who oversaw the settlement as the US Attorney in Brooklyn.
But in a report released Thursday, Public Citizen, a non-profit advocacy group, ran down a list of unlawful activities that the bank is accused of still participating in. The alleged transgressions include ties to a Panamanian company assisting US citizens avoiding taxes. In recent months, HSBC has also been accused by law enforcement of helping Belgian citizens commit tax fraud, and selling bogus credit card insurance in the UK.
“The government’s decision to offer HSBC a deferred prosecution agreement was remarkable in light of the egregious acts the bank had engaged in,” Public Citizen notes in its report.
“To the extent that the agreement offered a silver lining for the public, it was that it promised to compel HSBC to enact reforms that would prevent the bank from acting wrongfully in the future.” But, the group concludes that the bank “may have a long way to go to deliver on that promise.”
Those findings are reportedly back up by an independent monitor in charge of overseeing compliance at the bank. A source told the Wall Street Journal earlier this month that a review conducted by the monitor would “criticize the bank and lay out ways it needs to improve.”
The paper also reported that bank executives “question whether it is possible to stamp out money laundering entirely.”
A DOJ spokesman told Public Citizen that the review was completed and submitted to the department this month, but no information or comment will be provided about its conclusions until April, presumably after Lynch is sworn in as Attorney General–assuming her nomination makes it through the Senate.
During her confirmation hearing on Wednesday before the Senate Judiciary Committee, Lynch was asked by Sen. Richard Blumenathal (D-Conn.) about the HSBC settlement, and if more can be done to prosecute corporate crime in the future.
Lynch immediately separated herself from current US Attorney General Eric Holder who once testified that some banks are too big to prosecute.
“No individual is too big to jail and no one is above the law,” she said.
Lynch stayed away from the HSBC case in her answer, instead referring more broadly to her record as US Attorney going after corporate officers for insider trading and other forms of “malfeasance.” She stressed that her office had “extracted concessions,” and corporations have “made changes.”
Lynch spoke briefly as to what may happen if companies fail to make changes, as is reportedly the case with HSBC.
“We have been very clear with respect to the industries within which we are looking that–should a corporation not engage in preventative behavior or should they not take seriously the type of investigation that we bring–that criminal charges will be brought,” she told senators.
If confirmed, Lynch may have an opportunity to deliver on those criminal charges come April.
