EFRI, an association based in Vienna, Austria, set up in spring 2020, by now represents more than 1,052 European consumers who were defrauded by cybercriminals. As of writing the victims lost over EUR 59.2 million in the form of investment scams also referred to as boiler room scams.
HSBC, one of the world’s largest banks, is known for being a “dirty” bank. It is public knowledge that HSBC for decades has laundered hundreds of millions of dollars for Mexican drug cartels and HSBC took a prominent role in about all scandals which emerged over the past years: Panamapapers, Swissleaks, … (a video about the history of HSBC and its involvement in crimes can be watched here). So probably it is not surprising that this “dirty” bank is also heavily involved in Cybercriminal activities.
Cybercrime becomes a plague
Law enforcement agencies worldwide are emphasizing that the extent of cybercrime is progressing at an incredibly fast pace. Cybercrime is thriving during the pandemic, driven by surge in phishing and ransomware, but Cybercriminals are also becoming more agile, exploiting new technologies with lightning speed, tailoring their attacks using new methods, and cooperating with each other in industrial style ways we have not experienced before.
Transnational criminal networks operate across the world, coordinating intricate attacks in a matter of minutes and damaging and hurting people worldwide.
But we do not think that only the creative scammers are to be blamed. We also blame the European financial organizations (banks, payment institutions,..) for not caring about their contribution to the raids going on by the scammers. In addition we also blame the financial supervisory agencies worldwide for not having addressed the cybercrime issue properly for years and still not having realized the extent of crime and the danger looming around the corners.
Banks are supposed to be gatekeepers for the financial system
The use of the incumbent financial system is one of the most critical success factors for the scammers in addition to sophisticated software tools, aggressive marketing, fraudulent affiliate campaigns and unscrupulous call center employees. Even if cryptocurrencies are involved, the scammers always need the incumbent financial system to cash out.
Without the processing of illicit proceeds, used to fund serious criminal activities, the lifeblood of the scammers´ operations is disrupted.
The role of being the gatekeeper for any misuse of the incumbent financial system for banks and financial institutions can not be overemphasized and stopping the financial industry to support the scammery will most probably eventually turn out to be the only possibility to stop the scammers.
But right now by checking out the available bank documentation of victims and prosecutor files, it gets evident that banks like Deutsche Bank, ING and HSBC are just marketing heavily on their websites about their great global standardized AML (ANTI-Money-Laundering) programs, but evidently they do not apply them, they just do not care.
HSBC involvement in fraud
For example notwithstanding HSBC´s public “marketing” campaign to have implemented and abide by state-of-the -art compliance programs, the bank and its subsidiaries have paid over USD 6.5 billion in civil penalties since 2000, in total 59 violations have been registered.
EFRI represents 145 (63+82) European retail investors who have lost more than EUR 13.7 (1.9+11.5 + 1.3) Mio of their life savings to transnational criminal organizations which made use of the HSBC payment system to intake the stolen money, to launder it and to garner the proceeds of crime. Thereof 82 victims lost their money to a UK-led investment scam, with boiler rooms being in South East Asia (referred to as the “Investment Scam Asia” (ISA) Fraud”). More than 110 shell companies (for fictitious Trading Companies) in Hongkong, with more than 110 bank accounts, 78 of them in Hongkong, were established in the period between June 2013 and February 2021, of which more than 33 bank accounts were opened with HSBC.
We claim that HSBC either knew about the wrongdoing or at least willfully acted negligent regarding the fraudulent activities within its enterprise related to the two fraud schemes.
Therefore, we assume that HSBC participated in an association-in-fact enterprise with the Transnational Criminal Organization (TCOs) and made themselves accomplices in defrauding thousands of unsuspecting European retail investors. We assume that HSBC’s actions, namely the deliberate neglect of a legally required adequate set-up of a risk management system and other organizational units to prevent money laundering, were motivated by pure economic self-interest in order to gain a competitive advantage.
Based on our findings regarding the involvement of above all HSBC HK in scamming activities, we have filed an extensive criminal complaint describing the involvement of HSBC in the scamming business with all relevant authorities in Hongkong and Europe.
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We will report back on how the supervisory authorities – they one, who actually are responsible for proper implementation of AML/TF regulation in the financial system – will handle this criminal complaint.
 Hang Seng Bank is a subsidiary of the HSBC group with HSBC management being part of the board of directors of the Hang Seng Bank (source: Hang Seng Bank annual report 2019). HSBC group owns 62.14 % of Hang Seng Bank (source: Yahoo Finance, Wikipedia).