HSBC’s $1.92 billion payment to U.S. authorities to avoid prosecution for money-laundering practices, including transferring funds for Mexican drug cartels, raises serious questions about the flow of narco-cash in the international banking system. The time has come to tackle the culture of impunity that allows these illegal transactions.
The illicit drug trade remains international organized crime syndicates’ most lucrative source of income. Drug traffickers may be laundering up to 70 percent of the estimated $320 billion they make from illicit drugs annually, according to United Nations Office of Drugs and Crime (UNODC). Yet officials have been able to seize less than 1 percent of this.
In Central America, for example, we have all seen the effects of crime and drug trafficking. When criminals fight, it is innocent bystanders who often die. The homicide rate in El Salvador is 69 killings per 100,000 citizens; in Guatemala it is 39 per 100,000; and in Honduras it is 92 per 100,000. By contrast, in Great Britain, the homicide rate is roughly 1.2 per 100,000.
Shutting down the cartels’ cash flow could deal a significant blow to their operations and help rein in their lethal power. In 2010, UNODC put the value of the U.S. cocaine market at around $33 billion, closely followed by the European market at $31 billion.
But our efforts will come to nothing if implementation is ineffective, compliance is inadequate and vigilance poor. When legal and institutional weaknesses are exploited, effective regulation is crucial. Without this, sophisticated criminals can always find ways to push dirty money into the legitimate financial system.