HSBC Exec Announces Resignation During Senate Hearing

HSBC Exec Announces Resignation During Senate Hearing
ABC, July 17, 2012

By Matthew Mosk, Brian Moss, and Megan Churchmach

The head of compliance for HSBC told a U.S. Senate committee that he will be stepping down from his job during a hearing over whether his bank, one of the world’s largest, violated anti-money-laundering rules by allowing billions from drug cartels.

“I recommended to the group that now is the appropriate time for me and for the bank for someone new to serve as the head of group compliance,” said Bagley, the head of compliance since 2002. “I have agreed to work with the bank’s senior management toward an orderly transition of this important role.”

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Time to tackle money behind Latin American drug cartels
Santa Monica Daily Press, July 17, 2012

By Rafael Espada and Raymond Baker

Several Latin American leaders have proposed legalizing aspects of the drug trade in recent months, clearly acknowledging that the current strategy in the war on drugs is not working. They are correct in highlighting the flaws in the traditional approach to battling illicit narcotics, but do we really need to wave the white flag? Or do alternative approaches still exist to curtail the illicit drug trade?

The United Nations Office on Drugs and Crime in Vienna estimates that globally more than 40 percent of cocaine is seized somewhere between production and consumption. It also estimates, however, that less than one half of one percent of laundered criminal money is interdicted worldwide. For too long, the focus of the Drug Enforcement Administration and other law enforcement bodies has been on drug busts, while remarkably little has been done to curtail the money financing these illicit operations. We’ve been battling the symptoms without truly addressing the underlying cause. Curtail the money behind drug smuggling and we will curtail the crime itself.

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HSBC

How Much Will Mexico Money Laundering Cost HSBC?
Forbes, July 17, 2012

By Nathaniel Parish Flannery

Earlier this year, on February 27, 2012 HSBC Holdings Plc announced that it will likely face criminal or civil charges from an expanding U.S. Department of Justice investigation into its alleged ties to suspicious money transactions. Investigators are looking into the banks? dealings in Mexico.

Today, July 17, executives from HSBC, one of the world?s largest banks, are expected to testify before a U.S. Senate Committee regarding questions about how lax controls may have allowed money launderers to take advantage of HSBC?s services.

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HSBC Says It?s Sorry: Highlights From the Bank?s Senate Hearing
The Wall Street Journal (Blog), July 17, 2012

By C.M. Matthews

The WSJ reported today that, according to a Senate investigation, executives at HSBC ignored warnings for years that the bank?s far-flung operations were being used by money-launderers and potential terrorist financiers.

The Senate Permanent Subcommittee on Investigation is holding hearings to air the findings and senior HSBC officials and regulators are testifying.

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Money Laundering

Report berates Vatican bank, urges serious reform
Reuters, July 18, 2012

By Philip Pullella

A European report on Wednesday identified serious failings in the Vatican’s scandal-plagued bank, sharply criticizing its management and giving the Holy See a negative rating in almost half the most important transparency-related criteria.

The milestone report, by Moneyval, a department of the Council of Europe, suggests the Vatican still has a long way to go before it can be included on an international “white list” of countries that abide by global norms on combating money laundering, the financing of terrorism and tax evasion.

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Tax Avoidance and Evasion

Italy’s Super-Rich Move Their Yachts Amid Tax Evasion Crackdown
Huffington Post, July 16, 2012

By James Sunshine

Wealthy Italians are sailing away to calmer shores.

In an attempt to reign in alleged tax dodgers, Italian Prime Minister Mario Monti has ordered a crackdown on yacht owners who claim low or no income, The Telegraph reports (h/t The Daily Mail). Monti’s government has also instituted a 700 euro per-day tax on large yachts in Italian harbors.

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New Thoughts About What’s Hiding in Romney’s Tax Returns
Bloomberg, July 17, 2012

By Josh Barro

Bloomberg Businessweek’s Joshua Green is not alone in surmising that, if Mitt Romney is so insistent he won’t release his tax returns, they must contain something so damaging that he’s better off taking heat for not releasing them. Green has a theory: Romney didn’t pay any federal income tax in 2009.

As a member of the ultra-rich, Romney probably wasn?t spared major losses. And it?s possible that he suffered a large enough capital loss that, carried forward and coupled with his various offshore tax havens, he wound up paying no U.S. federal taxes at all in 2009. If true, this would be politically deadly for him. Even assuming that his return was thoroughly clean and legal ? a safe assumption, it seems to me ? the fallout would dwarf the controversy that attended the news that Romney had paid a tax rate of only 14 percent in 2010 and estimated he?d pay a similar rate in 2011.

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Economic Development

Africa on right path, partners to deliver promises
Africa News, July 18, 2012

By Abraham Fisseha

Africa made major improvements in the areas of sustainable economic growth, good governance, financing for its own development and investing in its peoples, but regional governments, partners and the international community need to deliver fully on their promises, The 2012 Report of the Mutual Review of Development Effectiveness (MRDE) was presented to the 27th Meeting of the NEPAD Heads of State and Government Orientation Committee (HSGOC).

According to the Information and Communication Service of ECA, the report says satisfactory progress had been made in each of the areas commissioned by the HSGOC, although attention needs to be paid to tackling the threat of climate change

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Corruption

Is FCPA Enforcement in Russia the Next China?
Law.com, July 18, 2012

By Robb Adkins and Dina Segal

Global anticorruption enforcement is at an all-time high and likely to increase. As a top federal enforcement official recently proclaimed, ?[W]e are in a new era of FCPA enforcement, and we are here to stay.? The U.S. Foreign Corrupt Practices Act (FCPA) is center stage in this enforcement effort, but it is increasingly paralleled by a number of anticorruption laws in other countries, such as the U.K. Bribery Act that went into effect last year. At the same time, U.S. companies, facing relatively faster-growing markets and reduced labor costs overseas, have been increasing their footprint in foreign countries.

These combined trends have caused companies to take a fresh look at their anticorruption compliance policies, conduct internal investigations, and take remedial measures. In recent years, much of the FCPA focus?by enforcement authorities, the public, and corporations?has been in China. Relatively little focus has been placed on Russia. This article explores the trends that suggest an increase in FCPA enforcement in Russia, and highlights some of the unique anticorruption challenges that U.S. companies face when doing business in Russia.

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Bangladesh corruption now reality TV for education minister
Reuters, July 17, 2012

By Anis Ahmed

Bangladesh aims to get the full picture on corruption in the education ministry by installing closed-circuit television cameras in its key offices in the capital to catch bureaucrats taking bribes for services.

“The officers have to change their mindset and work as servants of the taxpayers,” Education Minister Nurul Islam Nahid said at a CCTV installation ceremony last week in the capital of Dhaka.

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