Apparently HSBC isn't alone in being accused of a massive compliance breach. A complaint was filed against Standard Chartered Bank the other day for intentionally misleading U.S. regulators and committing fraud. They are accused of laundering money for Iranian clients. That sounds more serious than HSBC laundering money for Mexican drug cartels, because as far as we know those drug cartels aren't trying to build nuclear weapons - not that they wouldn't like having a bomb to play with.
So Standard Chartered Bank has to show up in a New York court in a week or so and explain why they shouldn't lose their licenses to operate in New York. I imagine there will be some sleepless nights for their executives and some lawyers in nice suits making a small fortune.
On a side note, I've heard market talk that other U.S. regulators are furious that the New York State Department of Financial Services didn't give them a heads up before taking action. Talk about a missed opportunity for the Obama administration to take credit for further cracking down on Iran.
Ironically, Iranian buyers are still potentially able to launder money via the U.S. real estate market, because the National Association of Realtors is exempt from complying with Anti Money Laundering (AML) regulation. And we wouldn't want them to have to comply with that, because that would hurt the housing market, which has supposedly already bottomed.
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