Substantially more detail than any previous reporting. Given views on Hamas within Congress, HSBC is probably toast. Don't be surprised if the fine exceeds $1 billion, which is the current high-end of analysts estimates.
Former employees in the New Castle office describe a febrile boiler-room environment overseen by managers uninterested in investigating transactions with possible links to drug trafficking, terrorist financing, Iran and other countries under U.S. sanctions, and other illegal activities. Instead, they say, the single-minded focus was on clearing out the paperwork as fast as possible.
"There were multiple backlogs" of alerts, said Everett Stern, who worked in the New Castle building from October 2010 to November 2011. "The name of the game was to close as many as you possibly can."
Stern sent an email to two superiors with the subject line, "Compliance error." In the email, Stern wrote: "I believe investigators in the department are unknowingly making a major compliance error. Over the last couple of months investigators have approached me about cases in the Middle East, especially in Palestine.… It appears that most investigators do not understand that the government of Palestine is the terrorist organization Hamas."
One of the bosses, Jeff Kraft, an anti-money laundering compliance manager, came bursting out of his cubicle. "Are you out of your f------ mind?" he said, according to Stern's recollection. "I should fire you right now."
Kraft insisted that Hamas was not a terrorist organization and that if government officials saw the email, the New Castle office would be shut down, according to Stern.
The New Castle look-back, overseen by consultants Deloitte LLP, was manned by more than 100 former law-enforcement officials, bank examiners and others. Many of them were working under contract with outside anti-money laundering consulting firms.
The gig paid well - between $65 and $125 an hour - and some contractors said they were making upwards of $200,000 a year.