"I always felt that the enforcement goal is to remedy the long-term practices," said Richard Riese, a senior vice president handling compliance issues at the American Bankers Association.
In addition to its monetary fine, HSBC must overhaul its anti-money-laundering program, "claw back" deferred compensation bonuses given to some senior executives and compliance officers and retain an independent compliance monitor for five years. Its leaders say that process is already underway.
"The HSBC of today is a fundamentally different organization from the one that made those mistakes. Over the last two years, under new senior leadership, we have been taking concrete steps to put right what went wrong and to participate actively with government authorities in bringing to light and addressing these matters," Stuart Gulliver, group chief executive at HSBC, said in a Dec. 11 statement. An HSBC spokesman declined to comment beyond that release.
In addition to bringing in new senior leadership, including former top anti-laundering Treasury officials Stuart Levey and Robert Werner, and restructuring its compliance and AML programs, the bank has also said it has increased its anti-laundering spending ninefold from 2009 to 2011, and its relevant staff by tenfold from 2010 to 2012.
"How much do those improvements change if there's criminal prosecution? I'm not convinced they do," said John Byrne, executive vice president of the Association of Certified Anti-Money Laundering Specialists.
The DOJ added that it can still pursue the case if the bank fails to make agreed upon changes.
"Deferred Prosecution Agreements do not prevent prosecutions of culpable employees, and they do not let banks off the hook. Banks can still face charges if they do not make specific, fundamental changes to culture and practices as required by the agreements," said Rebekah Carmichael, a spokeswoman for the Justice Department.
'Ultimate Insult'
Still, many have responded to the settlement with disdain for the basic message they said it sent about parity under the law. For some, a basic and almost instinctive sense of unfairness trumps practical justifications about economic damage and even innocent employees and shareholders. To them, the deal just doesn't sit right given the scope and severity of HSBC's lapses.
Several lawmakers, including former Rep. Barney Frank, D-Mass., and Sens. Jeff Merkley, D-Ore., and Chuck Grassley, R-Iowa, wrote letters to the Justice Department expressing frustration with the agency's handling of the case. The issue may continue to be a focus on Capitol Hill this year as part of lawmakers' efforts to further address concerns over "too big to fail" institutions.
"The Banking Committee will continue its oversight of the financial services industry to help ensure there is a level playing field and all financial services institutions are held accountable for their actions," said a Democratic Senate Banking Committee aide, speaking on condition of anonymity. "Throughout the last Congress, the committee conducted careful oversight on a wide range of anti-money-laundering and Bank Secrecy Act issues that have arisen in recent years. The committee plans to build on those efforts early this Congress by holding a full committee hearing on these important issues."
Some in the media also voiced strong outrage and concern over the Justice Department's handling of the case, warning that it undermined the government's strong stance on the "drug war."
"If you've ever been arrested on a drug charge, if you've ever spent even a day in jail for having a stem of marijuana in your pocket or 'drug paraphernalia' in your gym bag, Assistant Attorney General and longtime Bill Clinton pal Lanny Breuer has a message for you: Bite me," Rolling Stone's Matt Taibbi wrote in a Dec. 13 blog post. He called the HSBC settlement "the ultimate insult to every ordinary person who's ever had his life altered by a narcotics charge."
