We wrote last week about a New York judge’s decision to require publication of HSBC’s monitoring report related to remediation of its extensive lapses in AML/CTF controls prior to 2012. The original motion to release that report came from a plaintiff in a suit related to HSBC’s handling of mortgages, but the Wall Street Journal reported Monday that a new plaintiff has joined the claim for transparency from HSBC. That powerful plaintiff? A group of family members of U.S. soldiers killed or maimed by terrorists who lawyers claim benefitted from AML/CTF failings of certain banks.
In a case and a cause that focus directly on the human toll of questionable Compliance decisions of some financial institutions, lawyer Gary Osen filed on behalf of families of dead and injured servicemen and women.
Osen, whose firm specializes in civil counter-terrorism cases, asserted that the public has the right to know about wrongdoing by corporations and that deferred-prosecution agreements should not shield offending corporations from public scrutiny, particularly when those corporate offenses allegedly result in death and grave injury to U.S. soldiers and others.
Both HSBC and the U.S. Justice Department have appealed the judge’s ruling to release the report, claiming that confidentiality is central to these deferred-prosecution agreements and to enlisting corporations’ collaboration in remediating lapses in their AML/CTF operations.
But Osen, on behalf of the families of the dead and injured, wrote in his court filing that “the public—and especially the families of U.S. servicemen killed by agents of state sponsors of terrorism like Iran–have an acute and immediate interest in disclosure of at least those parts of the Report that bear specifically on Defendants’ alleged material support to agents of foreign terrorist organizations and other entities that support acts of international terrorism as defined by U.S. law.”
Osen, whose firm already achieved victory in an anti-terrorism case against Arab Bank PLC, filed a larger lawsuit in late 2014 accusing several large European banks of being responsible for the deaths and injuries to servicemen and women through their business dealings with banks and organizations that facilitated the funding of terror. Lawsuits such as these strike deeply at the boundaries of chains of accountability—both direct and indirect.
For financial institutions dealing with AML/CTF issues and weighing risk, these are important cases. Not just for the regulatory angle and the potential fines, but also for the potential hits to reputation and integrity. And while HSBC is currently under the microscope, Osen’s simultaneous focus on similar banks with similar AML lapses may keep this issue in the spotlight for the foreseeable future.
