Legal English

CHAPTER 1

WHITE-COLLAR CRIME

In general terms, white-collar crime can be referred to as the different illegal activities committed by office workers or even business executives who are largely motivated by financial gains. In 2021, it represented almost 50% of all fraudulent activities that were reported.

BEFORE YOU MOVE ON

1. What specific examples of white-collar crime can you give?

2. What is money laundering and why has it become more difficult to uncover?

3. Who should be tasked with investigating financial crimes?

4. What type of entities can most often become victims of fraud?

5. What do you think is needed to prevent white-collar crime from happening?

Task 1: Read the following article about white-collar crime.

Banks are considered to be one of the most common victims of financially motivated criminal activities. As repositories of huge volumes of cash, their accounts can be used in illegal ways to traffic money and trade in secret information. On the other hand, however, the fact that most banks are heavily regulated does not preclude them from becoming responsible, at least indirectly, for such incidents.

HSBC, headquartered in London, is a multinational investment institution operating in 64 countries around the world. It was established at the turn of the 19th century in Hong Kong, the then colony of the British Empire. As of 2021, it was the world’s sixth largest bank by total assets and market capitalisation, while second in the EU. However, despite its 156-year banking tradition, it has not managed to avoid being embroiled in a number of financial scandals. According to one of the most recent reports by independent journalists, the bank identified certain irregularities in 2016 while conducting standard checks on its accounts, but it failed to notify the relevant authorities about it.

The discovery, which later led the team of internal investigators to a money laundering network worth millions of dollars, was made at a time of intensified monitoring of the bank by a watchdog brought in by the US Department of Justice in 2012. But the issue did not surface until HSBC was forced to make its report public at the request of South African authorities, which were conducting their own investigation into high-level national corruption claims.

As the report revealed, the bank uncovered an illegal scheme when it was assessing the exposure to some of its clients, who themselves had come under the scrutiny of investigators. The scheme involved 4.2 billion dollars' worth of payments between 2014 and 2017. It is not clear whether this was brought up with the US monitor.

According to some insiders who spoke to the journalists behind the revelations, the bank might have purposely withdrawn the information in the hope that it might not come to light. HSBC never disclosed money laundering to us voluntarily. They waited to be asked about it, one member of the monitoring team said. This raised questions whether the bank abided by the rules of transparency in its dealings with the auditors.

According to the lawyers involved in the case, HSBC should have shared the information with the US monitors instantly when it became aware of the irregularities involving its accounts. Whether they did this is still subject to speculation. Nevertheless, the bank seems to find itself in hot waters because if the allegations turn out to be true, it could mean that the bank would have breached its prosecution agreement with the US authorities.

The agreement was reached after an earlier scandal involving the bank in which it was accused of allowing drug traffickers in Latin America to funnel millions through its accounts. According to the deal, criminal proceedings were deferred, and HSBC was requested to overhaul its anti-money laundering policies and take part in a four-year-long global supervision programme.

The programme entailed inspections by dozens of auditors who travelled to HSBC offices all over the world to check what kinds of monitoring and compliance procedures were in place across the bank’s sprawling business. Each team of auditors was entitled to request copies of the bank’s internal policies, procedures as well as meeting minutes. They could even demand access to specific client accounts that had become problematic.

The bank is denying any wrongdoing. It said in a statement that its internal compliance team could not find any evidence of an extended network of money laundering. Moreover, the bank warned that it was illegal to disclose the contents of the report it had made available to the authorities in South Africa. Over several years, HSBC has put in place robust policies to detect, deter and prevent financial crime across all of its affiliates globally that often exceed what is required in the local jurisdictions. We are committed to preventing criminals from accessing our financial systems, the bank concluded.

HSBC is now under scrutiny from US politicians, who are also investigating whether the bank’s executives can be held accountable.

Task 2: Decide if the following sentences are true or false.

1. The bank’s report was prepared and published at the request of the US.

2. The discovery of the irregularities coincided with the start of the supervision.

3. It was reported that the illegal activities had spanned two years.

4. The bank has previously faced money laundering charges.

5. The bank has agreed for cooperation if formal proceedings are instigated.

6. As part of the supervision, the auditors seized different bank documents.

7. The bank is now being sued by the US Department of Justice.

See answers

BEFORE YOU MOVE ON

REVIEW: SEIZE v SIZE

To seize is to confiscate or grab something violently, for example, the police can take possession of something by legal right, whereas size relates to dimensions or magnitude of something.

Examples

The police have seized our company’s hard drives.

They were surprised by the size of the office.

NOW, LET’S MOVE ON

Task 3: Find the right preposition for each gap.

1. The bank would rather comply ... the rules ... break the applicable law.

2. After receiving the application, the bank will respond ... the complaint ... ten business days.

3. Pursuing your profession as an investigator might build ... your confidence levels over time.

4. His colleague did not have any experience in the field and was ... a disadvantage ... regard ... the project.

5. The two lawyers were ... the impression that they had already seen him ... some conference before.

6. ... my honour, I swear ... you that I had no prior knowledge ... this report.

7. The CEO is very thrifty and likes to keep costs ... check.

8. We are always ... the hunt ... new talents.

9. ... addition ... her career as a financial advisor ... a city law firm, she is also a full-time clerk.

10. Our team of lawyers has drawn ... a new version of the contract.

Task 4: Match the following words (1-10) with definitions (a-l). There are two extra definitions that are not needed.

1. To commit to (v.)

2. To preclude (v.)

3. To funnel (v.)

4. Sprawling (adj.)

5. To overhaul (v.)

6. To deter (v.)

7. Robust (adj.)

8. To hold to account (exp.)

9. Embroiled (adj.)

10. To defer (v.)

a. To be involved in sth to the extent that it is hard to get away

b. The opposite of to encourage

c. To prevent sth from happening

d. Strong or healthy, unlikely to break

e. To make sb explain publicly why they have made a mistake

f. To be involved in sth marginally

g. The opposite of to bring sth forward

h. To end sth quickly and without delay

i. To agree to give your loyalty and time to a particular purpose

j. To move through a narrow space

k. To completely change sth so that it works better

l. Existing or reaching over a large area

Task 5: Find two mistakes in each of the following sentences.

1. On our last meeting, the board committed itself to present the results of the audit within two weeks from the date of its conclusion.

2. The inspector deferred the proceedings as part of a settlement with the company, details of which have not be made publicly availably.

3. I am very sorry to say that it all look like we have became embroiled in the biggest scandal of this decade.

4. Rather than retreat from the market and winding down our operations, we should try and overhaul our activities on this sector.

Task 6: Fill in the gaps with a proper verb form.

Dear Mr Ashton - President of the Management Board,

I (1) ______ (write) to you at the request of the security director, Mr Fasting, who (2) ______ (task) with (3) ______ (conduct) an inquiry into the allegations of certain financial irregularities at our bank.

The investigation (4) ______ (last) four weeks between 1 and 31 January and (5) ______ (conclude) with a number of findings, details of which I (6) ______ (forward) to you in the attachment.

The report (7) ______ (classify) and, as such, it (8) ______ (not/share) with the shareholders. However, according to the banking law, we now (9) ______ (have) a week until it (10) ______ (become) public.

Please, note that we (11) ______ (still/await) an external audit report which might in fact change our time limits for publication. If we (12) ______ (not/outsource) it in the first place, we (13) ______ (must) to go with the publication next week.

Should you have any questions regarding this matter, I (14) ______ (remain) at your disposal.

Yours sincerely (…)

See answers

GLOSSARY

COMMIT

to commit to – to promise to do sth loyally and willingly

to commit – to do sth illegal

a commitment (n.) – a credible promise to do sth

committed (adj.) – loyal and willing to give his or her time to sth

uncommitted (adj.) – unaffiliated and uninvolved

Examples

... committed to working harder ...

... committed crimes against humanity ...

... the company’s commitment to improve ...

... being a committed member of ...

... uncommitted voters of the ruling party ...

DETER

to deter – to prevent the occurrence of sth

to deter from – to discourage sb from doing sth

a deterrent (n.) – sth that discourages sb from doing sth

deterrent (adj.) – able to deter

Examples

... strategies to deter war ...

... problems deterred him from seeking ...

... cameras are a major deterrent to crime ...

... the deterrent effect of the new law ...

PRECLUDE

to preclude – to make sth impossible

to preclude from – to prevent sb from doing sth

a preclusion (n.) – the act of barring evidence from a trial

preclusive (adj.) – preventing sth from happening

Examples

... tensions precluded the recognition of ...

... it precluded him from pursuing a career ...

... preclusion of testimony is treated as ...

... grounds for a preclusive intervention ...

CHAPTER 1: ANSWER KEY

Task 2:

1. False (it was prepared by the bank while trying to assess the exposure to some of its clients and it was published at the request of the authorities in South Africa).

2. False (the discovery was made in 2016, while the supervision started in 2012).

3. False (the illegal activities spanned three years: between 2014 and 2017).

4. True.

5. False (the bank has denied any wrongdoing).

6. False (the auditors requested copies of different