Top Mexico Tax Official Fired for Permitting Money Laundering

Feb 11, 2021 By: Ignacio Rodriguez Reyna, Zorayda Gallegos and Silber Meza

Mexico’s tax authority has dismissed Ramón García Gibson, one of its highest-ranking officials, for “evident conflicts of interest” and his participation in a scheme that enabled the Sinaloa and Norte de Valle cartels to use HSBC Mexico’s infrastructure to launder hundreds of millions of dollars in the early 2000s.

This same individual is now a high-ranking official within the government of President Andrés Manuel López Obrador. His main duty is to prevent money laundering within the Tax Administration Service (Servicio de Administración Tributaria – SAT).

This is almost as difficult to believe as the fact that HSBC Mexico is a repeat offender: even after receiving the historic fine, the bank has received 19 more sanctions for the same issue: its failure to stop money laundering. 

His dismissal occurred on January 29, four months after Quinto Elemento Lab published an investigation on García Gibson, revealing the omissions made by the former official during his stint at HSBC Mexico, where he presided over the bank’s top anti-money laundering entity.

The report by Quinto Elemento Lab was published on September 21, 2020 and two days later, López Obrador ordered that an investigation be made into the SAT. “This man can no longer work within the government (…) we do not want bad officials,” he declared during his morning conference.

Four months later he was let go for “loss of confidence.”

García Gibson was president of HSBC’s Communication and Control Committee (Comité de Comunicación y Control – CCC) — the entity charged with stopping money laundering at the bank.

The report laid out the findings of investigations conducted by the US Senate and revealed unpublished details of an inquiry undertaken by the National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores – CNBV) about large-scale money laundering taking place at HSBC, which conclude that the bank became a “vehicle for crime, placing, concealing, legitimizing and distributing resources of illicit origin.”

The Tax Administration Service (Servicio de Administración Tributaria – SAT) acknowledged that the report was a key element leading to the dismissal of García Gibson, who served as the head of its Central Administration for Legal Affairs Concerning Vulnerable Activities.

“For SAT internal reviews, Quinto Elemento Lab’s investigation entitled ‘HSBC: la fiesta de los billetes rojos y los cuellos blancos,’ was one of the points of reference, as well as the report published by the United States Senate,” the SAT stated.

As drug traffickers’ bank of choice for many years, HSBC allowed its services to be used as a conduit for money laundering. The US and Mexican governments even slapped historic fines on the bank for its lax controls and permissiveness. Ramón García Gibson was the executive in charge of preventing this from happening. He now holds a high-ranking position in the Mexican government’s anti-money laundering division – a task at which he has failed before.  

The El Dorado Task Force, made up of agents from the US Departments of Justice, Treasury and Homeland Security, traced the channels used by Mexican and Colombian drug traffickers to launder their money within the country’s financial system.

Years of police and financial intelligence work led to results at the end of 2012: HSBC Mexico was one of the banks recommended by drug traffickers and money launderers between 2006 and 2010, due to its lax controls and its ability to turn a blind eye in exchange for constant business.

SAT chief Raquel Buenrostro personally conducted the internal investigation against García Gibson after Mexico’s President Andrés Manuel López Obrador instructed her to review his professional conduct and the accusations made against him.

The report discloses the modus operandi used by HSBC employees and top banking executives to allow drug cartels to launder hundreds of millions of dollars through the bank, putting the Mexican financial system at risk.

García Gibson’s performance at the bank was harshly criticized by his colleagues at other financial entities and by the US Senate. A report prepared by the Senate’s Permanent Subcommittee on Investigations, entitled “US Vulnerabilities to Money Laundering, Drugs, and Terrorist Financing: HSBC Case History,” mentioned him 59 times.

Upon leaving HSBC in 2009, García Gibson founded an anti-money laundering consulting firm bearing his name in June of the same year.

Over time, he was invited to give talks, workshops and seminars. He also became an investigator for the National Institute of Criminal Sciences (Instituto Nacional de Ciencias Penales – Inacipe), where he developed a proposal for a national strategy to combat money laundering.

He joined public service relatively recently after a banking career at HSBC, Banamex and Santander, the latter having also defended itself against money laundering accusations made by the United States government in relation to Operation Casablanca.

In October 2015, García Gibson was appointed as director-general of inspections and evaluations within Mexico’s National Security Commission before being named as coordinator for federal police investigations into operations with resources of illicit origin from November 2016 to October 2018. In early 2019, he was named as head of SAT’s Central Administration for Legal Affairs Concerning Vulnerable Activities, a strategic position at the very top of Mexico’s tax authority.

“As a public servant, García Gibson had an evident conflict of interests as he is the partner and founder of García Gibson Consultores, S.C., which offers consulting services regarding the laundering of money and resources of illicit origins, areas where he had insider information when serving as The SAT’s Central Administrator of Legal Affairs Concerning Vulnerable Activities,” said the SAT, concerning the dismissal.

The discovery of HSBC’s multiple failures to prevent the laundering of illicit funds resulted in the heaviest fines ever imposed on a financial institution in either the United States or Mexico: $1.9 billion and 379 million pesos (about $27.5 million), respectively. 

Through Mexico’s Access to Public Information Law, Quinto Elemento Lab obtained the comprehensive files prepared between 2007 and 2012 by the National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores – CNBV) which, across more than 20 volumes and some 10,000 pages, established how HSBC Mexico’s top management committed serious mistakes, such as: 

Deliberately failing to report suspicious transactions.

Permitting the exponential growth of bulk dollar shipments on armored trucks bound for the US. 

Deliberately delaying the issuance of client reports with unusual and suspicious transactions. 

Maintaining business relationships, until the last possible moment, with people, businesses and currency exchange houses used by drug traffickers to acquire aircraft.  

The discovery made by Mexican authorities aligned with the findings revealed in December 2012, by a squad of prosecutors and US special agents. The US Justice Department reported that HSBC had accepted full responsibility for committing crimes that seriously affected the workings of the US financial system and that the bank would face the largest fine ever for a financial institution within the country. 

HSBC and its subsidiaries, most notably HSBC Mexico, were accused of five serious violations, among others: 

-Deliberately failing to maintain and implement strict controls that would have avoided the laundering of proceeds from illicit activities and the financing of terrorism. 

-Maintaining supervision with “staggering and obvious blunders,” that permitted Mexican and Colombian drug traffickers to launder at least $881 million in the US financial system between 2006 and 2010. 

-“Turning a blind eye to money laundering” that occurred “right in front of their eyes.”

-Intentionally making mistakes when it came time to put in action an effective program for monitoring suspicious transactions conducted by HSBC Mexico.

-Relying on a system with such weak anti-money laundering controls that drug traffickers could deposit hundreds of thousands of dollars in cash into its HSBC Mexico accounts on a daily basis. 

-The agreement between US authorities and HSBC only validated what the US Congress documented during an exhaustive investigation conducted during the first half of that year.

The report elaborated by the end US Senate Committee’s Permanent Subcommittee on Investigations, entitled “U.S. Vulnerabilities to Money Laundering, Drugs, and Terrorist Financing: HSBC Case History,” laid the groundwork for conclusions that would be reached six months later by the US Justice Department.

A fourth of the US Senate investigation’s 334 pages were dedicated to examining the numerous flaws and shortcomings in HSBC Mexico’s anti-money laundering performance. And in 77 pages dedicated to revising the bank’s practices in Mexico, it mentions the name of a specific Mexican executive, whose performance was severely questioned, 59 times. 

*This investigation was carried out by Quinto Elemento Lab and CONNECTAS, with the support of the ICFJ, within the framework of the Investigative Reporting Initiative in the Americas (IRIA). It has been translated and edited for clarity and reprinted with permission. It does not necessarily reflect the views of InSight Crime. Read the original in Spanish here. 

Source: InSightCrime