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WARREN: ‘How Many Billions Have To Be Laundered For Drug Lords Before We Consider Shutting Down A Bank?’

Monday, March 11, 2013 11:50

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Elizabeth Warren is still waiting for an answer.

In Senate testimony Thursday, Liz Warren asks how much drug-laundered money it takes before banking regulators consider shutting down a bank. Hilarity ensues. And no one ever answers the question.

Witnesses were:

David Cohen, Sec. for Terrorism and Financial Intelligence, U.S. Treasury
Thomas Curry, Comptroller, Office of the Comptroller of the Currency
Jerome H. Powell, Governor, Federal Reserve System

—

Transcript

WARREN: As Senator Reed just pointed out, the United States government takes money laundering very seriously for a very good reason.

Now in December, HSBC admitted to money laundering. To laundering $881 million that we know of for Mexican and Colombian drug cartels. And also admitted to violating our sanctions for Iran, Libya, Cuba, Burma, the Sudan. And they didn’t do it just one time. It wasn’t like a mistake. They did it over and over and over again across a period of years. And they were caught doing it. Warned not to do it. And kept right on doing it. And evidently making profits doing it.

Now HSBC paid a fine, but no one individual went to trial. No individual was banned from banking. And there was no hearing to consider shutting down HSBC’s activities here in the United States. So what I’d like is, you’re the experts on money laundering. I’d like your opinion. What does it take? How many billions of dollars do you have to launder for drug lords and how many economic sanctions do you have to violate before someone will consider shutting down a financial institution like this? Mr. Cohen, can we start with you?

COHEN: Certainly Senator. No question the activity that was the subject of the enforcement action against HSBC was egregious.

WARREN: But let me just move you along here on the point Mr. Cohen. My question is, given that this is what you did, what does it take to get you to move towards even a hearing? Even considering shutting down banking operations for money laundering?

COHEN: Senator, we at the Treasury Department under OFAC and (ph) authority, we don’t have the authority to shut down a financial institution.

WARREN: I understand that. I’m asking, in your opinion, you are the ones who are supposed to be the experts on money laundering. You work with everyone else, including the Department of Justice. In your opinion, how many billions of dollars do you have to launder for drug lords, before somebody says, we’re shutting you down?

WARREN: And I’m asking, what does it take, even to say, here’s where the line is. We’re going to draw a line here, and if you cross that line, you’re at risk for having your bank closed?

COHEN: But I’m not going to get into some hypothetical line drawing exercise.

WARREN: Well it’s somewhere beyond $881 million of drug money.

COHEN: Well Senator the actions, and I’m sure the regulators can address this issue. The actions that we took in the HSBC case, we thought were appropriate in that instance.

WARREN: So what you’re saying to me is you are responsible for these banks, and again, I read your testimony and you talk about the importance of vigorous enforcement here. But you’re telling me you have no view when it’s appropriate to consider even a hearing to raise the question of whether or not these banks should have to close their operations when they engage in money laundering for drug cartels?

WARREN: I understand that I’m over my time. And I’ll just say here, if you’re caught with an ounce of cocaine, the chances are good you’re going to go to jail. If it happens repeatedly you may go to jail for the rest of your life. But evidently, if you launder nearly a billion dollars for drug cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your own bed at night. Every single individual associated with this. I just, I think that’s fundamentally wrong.

“How would you explain this to your neighbor?” Sen. Jeff Merkley (D-Ore.) asked, noting that the fine slapped on HSBC amounted to about one percent of its profits over 10 years. “Does that really send a message?”