Mossad and Israeli Army refused to prepare plan of attack against Iran

By LUIS MIRANDA | THE REAL AGENDA | NOVEMBER 6, 2012

Everyone knows Benjamin Netanyahu, the Israeli prime minister, and his defense minister, Ehud Barak, can’t wait to bomb Iran. Everyone is also aware of their failure to convince their military and intelligence regarding the inevitability of an Iranian led attack on Israel.

It is also clear that the government headed by Barack Obama is not fond of carrying out an attack on Iran — at least not right now — despite the warrior spirit shown by Netanyahu, which has become clearer during the past two or three months. Had George Bush or Mitt Romney been presidents for the last four years, the attack on Iran would have had a better chance of happening than it did during Obama’s time in office.

What we did not know and is that both Mossad and the Israeli army clearly refused to prepare a plan to attack Iran. The plan was supposedly requested by Netanyahu, according to channel 2 from Israeli television.  The current prime minister asked for the crafting of concrete plans and even ordered the country to prepare for an imminent attack in 2010. The Army and Mossad, contrary to what Netanyahu had in mind, refused to create or run such plans.

Gabi Ashkenazi, chief of staff then, and Meir Dagan, the head of Mossad at the time, stood up to the political leaders and made it clear that an attack on Iran would be tantamount to a declaration of war, which they considered a strategic error of first order.

Uvda (Done) was the program from channel 2 that made the revelations aired Monday night in Israel, as advertised by the local press. The report talks about a meeting that took place in 2010 and that was attended by the seven chief ministers of the executive.

Right after the meeting and just as Ashkenazi and Dagan were about to walk out the door, Netanyahu ordered them to raise the level of alert called “P Plus”, the code used for the preparations for an imminent military strike.

Given the uncertainty of the Prime Minister, Ashkenazi and Dagan refused, reported the Yedioth Ahronoth newspaper. “You may be taking an illegal decision to go to war,” said Dagan to Netanyahu.

The Mossad chief was referring to the political implications of that alleged declaration of war. The fact that Netanyahu ordered the Army and the Mossad to prepare the country for an attack means that the prime minister tried to force his cabinet ministers to approve such decision, and gave himself the power to decide to go to war without consulting anyone.

Uvda confirmed this version of events with minister Ehud Barak himself. Defense Minister Barak apparently distanced himself from Netanyahu weeks after the meeting due to his intention to attack Iran, which Netanyahu said was necessary to stop the country from producing a nuclear weapon.

While Tehran maintains that its nuclear facilities are solely used to produce energy, the West distrusts Iranian plans and the Israeli Prime Minister considers it even an existential threat to his country.

In his recent speech to the UN General Assembly on late September, Netanyahu hinted that an attack on Iran could wait until spring or even next summer.

From that moment, as calculated by the Prime Minister, Iran’s nuclear program would reach a point of no return in which the regime in Tehran could produce an atomic bomb within weeks. Washington has been reluctant so far to participate in military adventures such as the alleged plans requested by Netanyahu.

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Iran Playing American-style Politics

Obama finds an unlikely ally in the Iranian leadership

By LUIS MIRANDA | THE REAL AGENDA | NOVEMBER 5, 2012

As unlikely as it may seem, Iran has chosen a side in the American election. The suspension of part of its uranium enrichment is a very positive move to help Barack Obama clinch the presidency for a second time in a row.

Reports surfaced last week about a possible negotiation between the Iranian and American governments that sought to stop the enrichment of uranium conducted by the government led by Mahmoud Ahmadinejad. Two days before the election, several media outlets confirmed that the Iranian government halted its uranium enrichment process by as much as 20%.

The Iranian goal is to obtain a moratorium in the sanctions imposed on that country by the West; mainly the United States. However, the move to slow down the production of nuclear material, which the Iranians say the base for energy independence, is also making Barack Obama look good at home. In the United States and abroad, political pundits are assigning credits to Obama while saying that American sanctions have been of paramount importance to curb Iran’s thirst for a nuclear bomb.

Iran has suspended uranium enrichment to 20% in order for the West to lift economic sanctions imposed on the government and several strategic sectors, as confirmed by the Iranian parliamentarian Mohammad Hosein Asfari to pan-Arab Al Arabiya chain.

Asfari, who is the chairman of the Parliamentary Committee on Foreign Policy and National Security, said that the Iranian government is willing to suspend uranium enrichment as a “goodwill gesture” with the intention to open direct negotiations with the United States, scheduled for after Tuesday’s presidential elections, as recorded by the Iranian news agency ISNA.

However, the Iranian parliamentarian said movement has conditioned the talks to the lifting of sanctions imposed on Iran. If a positive answer from the West fails to arrive, Tehran will resume the uranium enrichment process, according to Al Arabiya.

The decrease in enrichment of uranium to 20 percent of Iran’s capacity is not enough to develop a nuclear weapon, although the head of the Atomic Energy Organization of Iran, Fereydoun Abbasi, confirmed this week that the Government is finalizing the installation of centrifuges at the Fordow enrichment plant , in the north of the country.

The Iranian economy is being hit hard by the sanctions, affecting especially in the oil sector, the main item of income for Iran. In this context, the spokesman for the Iranian Foreign Ministry, Ramin Mehmanparast, has insisted that the government “has nothing to hide” over its nuclear program and proposed to have a live broadcast of the operations as well as to hold talks with the Group 5 +1 — the five permanent members of the Security Council of the UN and Germany.

“The conversations we are encouraging are highly transparent and our proposals are very specific. That is why Iran has advocated to have a live broadcast of the whole dialogue,” said the spokesman to the Iranian news agency Fars. “Our dispute with the other party are neither technical nor legal, but political,” Mehmanparast stressed.

Whether Iran intended to help Barack Obama or not — since Obama has shown to be more tolerant towards Iran than Romney has promised to be — the move has helped the US president’s public image during a time when Mitt Romney seemed to be surging in the polls all over the United States. Sizeable differences in traditionally democratic states have turned into short leads and some disputed states have even turned for Romney in the last few weeks. Meanwhile, Obama and his pundits hope that the Iranian bump shows tomorrow at the voting booths.

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US and Israel Maneuver to train Attack on Iran

By LUIS MIRANDA | THE REAL AGENDA | OCTOBER 18, 2012

The U.S. and Israeli armies will play war games during the largest joint maneuvers for a period of three weeks with thousands of military troops from both countries training on details for an attack on Iran’s nuclear facilities.

Part of the group of U.S. forces that will intervene in Austere Challenge 12 are already in Israel, waiting for the go to start their military exercises. No army sources have confirmed when will the drills start and it is likely that the world will only know once the exercise is on the way.

The reserve with which both countries address the issue is due to the fear that the maneuvers are misinterpreted by Iran. There is also a danger that this exercise, or parts of it turn into an ‘accident’ that may spark conflict among the three countries, with the US and Israel on one side and Iran on the other.

“Austere Challenge 12 includes theoretical scenarios, not related to actual events in the world,” he Lt. General Craig Franklin, in a teleconference with reporters. Franklin is a commander of the U.S. Air Force in Europe, and he will arrive next week to Israel to head the operation.

In a message transmitted by both militaries, commanders in charge of the exercise have categorically denied information that “AC12” will simulate an attack with thousands of rockets that Iran may conduct against Israel and its allies in the region, which would be aided by Hezbollah and Hamas.

However, this is the very same scenario that Israel can expect if prime minister, Benjamin Netanyahu gives the order to bomb Iran’s nuclear facilities. The action, which has not had public support from the United States, and that has been labeled as suicide by former and current members of the intelligence community, has been limited to verbal threats made by Israel and contested by Iran.

Israeli Brigadier General Nitsan Nuriel, explained that the exercises provide for a scenario of “threats on all fronts,” and that “everyone can draw their own conclusions.”

“It is a clear message that we work together and that together we can achieve more and, from there, each draws their own conclusions,” he explained while trying to respond questions about the scope of the exercise.

More than a thousand U.S. military will participate in the maneuvers conducted from Israeli territory and another 2,500 will do it from bases in Europe and warships in the Mediterranean, with a total cost of about $ 30 million (23.5 million euros) for the U.S. taxpayers.

“When completed, all U.S. troops will leave Israel,” said Lt. Gen. Franklin, which “should eliminate conjectures that warn about an armed build up to attack Iran.”

AC12 will be held in the utmost secrecy, which has many intelligence analysts wondering if this will be the base for a future attack on Iran. Neither the US not Israel have revealed dates or locations about an exercise that intends to play out a scenario where anti-aircraft systems will turn into an ‘umbrella’ to protect Israel in the event of an attack. All similarities to a real life situation will of course be ‘coincidental’.

At the epicenter of the drills are the Aegis ballistic missile system and U.S. Patriot missiles, to which Israel will incorporate its Arrow anti-missile batteries and Iron Dome radar system.

The latest air defense exercise was “Juniper Cobra” in 2010, but technological advances made it necessary to recalibrate the systems for both armies, military sources have said. Among the new systems to be used in AC12 are the new Israeli Patriot and Iron Dome, which were not fully operational two years ago.

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Israeli Lobbyist Suggests using False-flag to Attack Iran

By LUIS MIRANDA | THE REAL AGENDA | SEPTEMBER 26, 2012

Patrick Clawson a Washington lobbyist and director of the Washington Institute for Near East Policy (WINEP), said that the west, especially the United States and Israel are “in the game of using covert means against the Iranians”.

Clawson cited a series of false-flag events as examples that triggered the invasion of non-aligned states and explained how those false-flag events served the plans of the Anglo-saxon military industrial complex.

Clawson was once a senior economist for the International Monetary Fund and the World Bank. “We can do a variety of things to increase the pressure,” said Clawson. “We could get nastier about it. So, if in fact the Iranians aren’t going to compromise, it would be best if somebody else started the war,” he asserted.

At a later point, Clawson said that he was in no way recommending the use of such events to attack Iran, even though he said that very same thing throughout his explanation of Iranian-Israeli tensions.

See the video below:

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HSBC Permits Money Laundering for Wealthy Clients

Documents and E-mails show that the bank not only doesn’t inquire about the origin of funds, but also works hard to conceal the transfer of large amounts of cash from clients of Iranian, Lebanese, Brazilian and Cuban origin.

Most suspicious transactions are done through the HSBC’s New York and Miami offices.

By CARRICK MOLLENKAMP, BRETT WOLF and BRIAN GROW | VANCOUVER SUN | MAY 8, 2012

In April 2003, the Federal Reserve Bank of New York and New York state bank regulators cracked the whip on HSBC Bank USA, ordering it to do a better job of policing itself for suspicious money flows. Staff in the bank’s anti-money laundering division, according to a person who worked there at the time, flew into a “panic.”

The U.S. unit of London-based HSBC Holdings Plc quickly rallied. It hired a tough federal prosecutor to oversee anti-money laundering efforts. It installed monitoring systems for operations that had grown unwieldy during the bank’s U.S. expansion. The aim, as HSBC said in an agreement with regulators at the time, was to “ensure that the bank fully addresses all deficiencies in the bank’s anti-money laundering policies and procedures.”

Nearly a decade later, the effort has failed to satisfy law-enforcement officials.

The extent of that failure is laid out in confidential documents reviewed by Reuters that originate from investigations of HSBC’s U.S. operations by two U.S. Attorneys’ offices.

These documents allege that from 2005, the bank violated the Bank Secrecy Act and other anti-money laundering laws on a massive scale. HSBC did so, they say, by not adequately reviewing hundreds of billions of dollars in transactions for any that might have links to drug trafficking, terrorist financing and other criminal activity.

In some of the documents, prosecutors allege that HSBC intentionally flouted the law. The bank created an operation that was a “systemically flawed sham paper-product designed solely to make it appear that the Bank has complied” with the Bank Secrecy Act and is able to detect money laundering, wrote William J. Ihlenfeld II, U.S. Attorney for the Northern District of West Virginia, in a draft of a 2010 letter addressed to Justice Department officials.

In that letter, Ihlenfeld compared HSBC unfavorably to Riggs Bank. In 2004 and 2005, that scandal-plagued Washington bank was fined a total of $41 million after it was found to have violated anti-money laundering laws, and it was acquired by PNC Financial Services.

“HSBC is to Riggs, as a nuclear waste dump is to a municipal land fill,” Ihlenfeld wrote.

The allegations laid out in the Ihlenfeld letter and other documents couldn’t be confirmed. It is possible that subsequent inquiries have led investigators to alter their views of what went on inside HSBC’s compliance operation.

As they are, the documents reviewed by Reuters, combined with regulatory filings, court documents and interviews with current and former HSBC employees, paint a damning portrait of a bank allegedly unable, and unwilling, to police itself or its clients.

HSBC’s U.S. anti-money laundering division – the people charged with ensuring that the bank toes the line of regulators and law enforcement – has experienced high turnover among executives. Since 2005, at least half a dozen overseers have come and gone. Compliance staff also encountered pushback from bankers eager to maintain relationships with lucrative clients whose dealings raised red flags.

In the Miami office – an important center for HSBC’s private-banking and retail operations – a longtime private banker was fired for alleged sexual harassment after he warned compliance officers that clients were engaged in shady dealings.

In one email exchange submitted as evidence in that case, employees debated whether the bank should help a Miami client get around U.S. sanctions by moving the client’s business to HSBC’s Hong Kong office. “I believe that the best outcome would be for the customer to open a relationship with Hong Kong just for leters (sic) of credit purposes. He travels there all the time,” private banker Antonio Suarez wrote in a 2008 email. Suarez has since left the bank and couldn’t be reached for comment.

UNDER THE RADAR

The revelations come as HSBC confronts multiple investigations into its internal policing abilities. The Justice Department, the Federal Reserve, the Office of the Comptroller of the Currency, the Manhattan district attorney, the Office of Foreign Assets Control and the Senate Permanent Subcommittee on Investigations are scrutinizing client activities such as cross-border movements of bulk cash, and transactions linked to Iran and other parties under U.S. economic sanctions, the bank said in a February regulatory filing.

“We continue to cooperate with officials in a number of ongoing investigations,” HSBC spokesman Robert Sherman said. “The details of those investigations are confidential, and therefore we will not comment on specific allegations.” HSBC said in its February filing that it was likely to face criminal or civil charges related to the probes.

A successful case against HSBC could result in an onerous fine and represent one of the most significant money laundering cases ever brought against an international bank. It also would draw unaccustomed attention to the challenges governments — and financial institutions — face in monitoring the trillions of dollars flowing through banks’ back-office operations, flows essential to the daily functioning of the global financial system.

“Disguised in the trillions of dollars that is transferred between banks each day, banks in the U.S. are used to funnel massive amounts of illicit funds,” Jennifer Shasky Calvery, head of the Justice Department’s Asset Forfeiture and Money Laundering Section, said in congressional testimony on organized crime in February.

In response to Reuters inquiries about the investigations, Gary Peterson, chief compliance officer of HSBC’s U.S. bank operations, said: “Since joining HSBC in 2010, I’ve been proud to lead an AML (anti-money laundering) team that has vastly increased investments in people, systems and expertise. We are continuously seeking to strengthen our core AML mission: to detect and deter money laundering and terrorist financing – and our efforts are showing results.”

To date, the only enforcement action detailing any anti-money laundering shortcomings at HSBC was a 2010 consent order from the Office of the Comptroller of the Currency, the Treasury agency that is HSBC’s chief regulator. The OCC, calling HSBC’s compliance program “ineffective,” told the bank to conduct a review to identify suspicious activity. This “look-back” was expected to yield a report to HSBC and regulators. The status of the report isn’t known. A spokesman for the OCC declined to comment.

The West Virginia U.S. Attorney’s probe of HSBC, which ran from 2008 until at least 2010, originated in a case against a local pain doctor who allegedly used HSBC accounts to launder ill-gotten gains from Medicare fraud. Over time, the U.S. Attorney’s office began to discern that, as Ihlenfeld wrote in his letter, the doctor’s case was just “the tip of the iceberg” in terms of the volume of suspicious money sluicing through HSBC.

The U.S. attorney for the Eastern District of New York in Brooklyn – one of the most powerful prosecutors outside of Justice Department headquarters in Washington – has conducted a parallel investigation, in collaboration with the Justice Department’s money laundering section.

Specifics on the investigations have until now been cloaked in secrecy. The documents reviewed by Reuters for the first time fill in some of the details. Taken together, they depict apparent anti-money laundering lapses of extraordinary breadth. Among them, according to the documents:

* The bank understaffed its anti-money laundering compliance division and hired “gullible, poorly trained, and otherwise incompetent personnel.” In 2009, the OCC deemed a senior compliance official at HSBC to be incompetent – the same executive in charge of implementing a new anti-money laundering system.

* HSBC failed to review thousands of internal anti-money laundering alerts and generate legally required suspicious activity reports, or SARs, on transactions picked up by the bank’s internal monitoring system. SARs are important because they are sent to U.S. law enforcement and scrutinized for leads to criminal activity. In May 2010, the bank’s backlog of alerts was nearly 50,000 and “growing exponentially each month,” according to one of the documents.

* Hundreds of billions of dollars moved unchecked each year through various bank operations because of lax due diligence and monitoring of accounts with foreign correspondent banks, which are financial institutions that rely on U.S. banks for processing services. The bank maintained accounts with “high risk” affiliates such as “casas de cambios” – Mexican foreign-exchange dealers – widely suspected of laundering drug-trafficking proceeds, and some Mexican and South American banks.

* In some instances, “management intentionally decided” not to review alerts of suspicious activity. An investigation summary also says, “There appear to be instances where Bank employees are misrepresenting” data sent to senior managers, and where management altered risk ratings on certain clients so that suspect transactions didn’t set off alarms.

Sherman, the HSBC spokesman, said the bank cleared the backlog of alerts and has remained current. Sherman also said the bank “regularly reviews risk ratings. We have revised and strengthened our country risk rating review policies.”

Spokesmen for the U.S. Attorney in Wheeling, West Virginia, and for the U.S. Attorney in Brooklyn declined to comment. The Justice Department in Washington also declined to comment, citing “an ongoing investigation into this matter.”

THE MIAMI CONNECTION

HSBC was born in 1865 as the Hongkong and Shanghai Banking Corp in the then-British colony of Hong Kong. It had little presence in the U.S. market until its purchase in the 1980s of Marine Midland Banks Inc based in Buffalo, New York.

Now the fifth-largest bank in the world in terms of market value, HSBC had $2.6 trillion in assets at the end of 2011 and operations in 85 countries and territories. Its North American business, which includes HSBC Bank USA and a consumer finance unit, accounts for about 5 percent of HSBC’s profit.

In 1999, HSBC’s U.S. unit paid $10 billion to buy Republic New York Corp and a European affiliate, banks controlled by Lebanese financier Edmond Safra. The deal doubled HSBC’s private bank to 55,000 clients with $120 billion in assets and broadened business in New York, Florida, Latin America and Europe.

The purchase also yielded one of the world’s biggest banknote businesses, an operation that handles bulk cash exchanges between central banks and large commercial banks. In 2003, HSBC plunged into the U.S. market for subprime lending, paying $14 billion for Household International Inc.

By then, all banks faced U.S. regulatory pressure aimed at stopping shady money flows. In the wake of the September 11, 2001, attacks, the Patriot Act took effect, attempting, among other things, to choke off terrorist financing by strengthening requirements that banks look for and report suspicious activity. In recent years, U.S. law enforcement added an emphasis on money tied to the illegal drug trade.

When the 2003 order came down from regulators for HSBC to improve its anti-money laundering efforts, the bank had no centrally organized means of monitoring the movement of money across borders. That’s when it hired Teresa Pesce. Pesce came from the high-profile U.S. Attorney’s office in Manhattan, where she made a name for herself as a tough prosecutor overseeing money laundering prosecutions.

Pesce “knew the ropes,” according to a person who worked in compliance at the time, and the sense among many staffers was that a “savior was here.” One of her first initiatives was to order the installation of the Customer Account Monitoring Program, or CAMP, a technology system designed to filter suspicious retail transactions across HSBC’s U.S. operations.

In 2006, regulators lifted their 2003 order, according to people familiar with the situation.

Pesce left the bank in 2007 to run KPMG LLP’s anti-money laundering consulting business. A lawyer for Pesce declined to comment.

Despite Pesce’s efforts, problems with HSBC’s program persisted. In 2009, the OCC determined that Lesley Midzain, a compliance executive with little direct experience running anti-money laundering programs, was incompetent. She was in charge of the installation of a monitoring program to replace Pesce’s CAMP system, which the OCC had determined was “inadequate to support the volume, scope and nature of international money transfer transactions,” according to the documents reviewed by Reuters. Efforts to locate and obtain comment from Midzain were unsuccessful.

The former compliance-division staffer said that in the Miami office in particular, with millions of dollars from Mexico, Brazil, Argentina and other countries flowing through the Premier private-banking business for wealthy clients, “it was a nightmare to figure out what was going on down there.”

Those observations mesh with allegations in a 2010 lawsuit against HSBC brought by Tomas Benitez, a longtime private banker in South Florida who had worked at Republic Bank. Benitez alleged that HSBC fired him in January 2009 after he warned colleagues that clients had violated U.S. restrictions on trade with Iran and Cuba.

HSBC said in a court filing that it fired Benitez for alleged sexual harassment – allegations Benitez denied.

In court documents, Benitez alleged that during an audit meeting in 2008, an unidentified federal bank examiner told HSBC employees that a client referred to only as “CM” “had multiple affiliations whose ties to Iran and Cuba were part of their ordinary course of business.

At a follow-up meeting, the account was discussed because of indications its owner “was funneling large amounts of funds in and out, with no apparent business purpose,” Benitez alleged. He told Clara Hurtado, director of anti-money laundering compliance at HSBC’s private bank in Miami, that the account had ties to Iran and Cuba and “as a result, it should not be maintained,” according to the lawsuit.

After the meeting, Benitez alleged, another banker said “he would not allow Benitez’s word and suspicions to defeat a million-dollar-plus account relationship.” The account wasn’t terminated, Benitez alleged.

Hurtado declined to comment. She left HSBC in 2009, according to her LinkedIn account.

In an email exchange submitted as an exhibit in the lawsuit, Hurtado and other HSBC employees discussed whether the bank could help a Miami client avoid violating U.S. sanctions by issuing letters of credit for the client from the bank’s Hong Kong offices, according to Benitez’s lawsuit. “Clara, we are persuing (sic) another solutions……(anything but losing the account!!!),” Suarez, the private banker, wrote in an email. The banker suggested issuing the letters of credit through Hong Kong.

In January 2009, HSBC fired Benitez. In late 2010, a federal judge dismissed his case and demand for pay, saying there was no evidence of a connection between Benitez’s concerns about the accounts and the firing. The judge didn’t address Benitez’s allegations about illicit transactions.

Benitez’s Miami lawyer, Mark Raymond, declined to comment on his client’s behalf.

HSBC spokesman Sherman declined to comment on Benitez’s case. “It’s inappropriate to comment on unsubstantiated allegations in termination of employment cases,” he said.

OBVIOUS TO STOOGES

Around the time Benitez was sounding warnings in Miami, authorities were accelerating an investigation in West Virginia of Barton Adams, a pain clinic operator in the Ohio River town of Vienna. In 2008, the U.S. Attorney in Wheeling indicted Adams on 157 counts of alleged healthcare fraud and other crimes. They allege that Adams moved hundreds of thousands of dollars in Medicare fraud proceeds between a U.S. HSBC account and HSBC accounts in Canada, Hong Kong and the Philippines.

Adams has pleaded not guilty.

In building their case against him, the West Virginia prosecutors determined that HSBC’s compliance problems were systemic. As Ihlenfeld wrote in his letter to the Justice Department: “The Adams money laundering practices – which Moe, Larry, and Curly would dismiss as too transparent – would not be detected by HSBC regardless of who the customer was, or where any transaction occurred.” HSBC, he said, “systematically and egregiously” violated the Bank Secrecy Act.

One document reviewed by Reuters says HSBC developed a “large appetite for risk” after snapping up business with Mexican foreign-exchange houses formerly handled by Wachovia Corp. In 2010, Wachovia agreed to pay $160 million as part of a Justice Department probe that examined how drug traffickers had moved money through the bank.

West Virginia prosecutors focused much of their attention, according to the documents, on HSBC’s failure to report suspicious activity on hundreds of billions of dollars in business from “high-risk” sources.

For instance, 73 percent of accounts with foreign correspondent banks were rated “standard” or “medium” risk and thus weren’t monitored at all, the documents say, noting that oversight of such accounts was “extremely limited despite indications of possible terror financing.” In one example, the bank “summarily cleared as many as 5,000” internal alerts of suspicious activity from correspondent customers in Argentina after lowering the country’s risk rating.

Investigators cited a litany of failings in the bank’s back-office operations — the vast but mundane business of clearing transactions by moving big sums of money around the globe. In the bank’s “remote deposit capture” business – an operation that electronically zaps checks around the world — HSBC “failed to detect, review and report large volumes of sequentially numbered traveler’s checks” from non-U.S. sources. Such checks are a red flag signaling possible money laundering, regulators have said.

HSBC also repatriated more than $106.5 billion in banknote deposits through foreign correspondent accounts, many of them in Mexico and South America, in a three-year period. And yet, “since 2005, the bank has filed only 19 suspicious activity reports relative to the receipt of bulk cash and banknote activities.”

People familiar with HSBC and the reports said 19 is a low number given the risk of the clients. Between 2005 and 2010, banks and other depository institutions filed more than 3.8 million SARs, according to the Financial Crimes Enforcement Network, a bureau of the Treasury Department.

Similarly, investigators found that HSBC didn’t report any suspicious activity after Drug Enforcement Administration agents posing as drug dealers deposited millions of dollars in Paraguayan banks and then transferred the money to accounts in the U.S. through HSBC. They have also been examining connections between one of the Paraguayan banks and Hezbollah, the Lebanon-based Islamist group classified by the U.S. as a terrorist organization. HSBC has since ended its relationship with the Paraguayan bank, according to government documents.

Ultimately, the U.S. Attorney’s office in West Virginia entered into plea negotiations with HSBC, the documents show. A person familiar with the investigation said a deal could have resulted in one of the largest settlements ever in a bank money laundering case.

For reasons that aren’t clear, prosecutors in West Virginia were told to stand down while the Eastern District of New York and other Justice Department divisions continued to investigate, according to a Justice Department document and an HSBC regulatory filing. The West Virginia probe could ultimately prove to be a narrow slice of a broader case if criminal or civil charges emerge.