Drug war victims sue HSBC for laundering the billions of ‘terrorist’ Mexican cartels

Updated Feb. 24, 2016 at 12 p.m.: the story has been updated with minor clarifications.

Families of drug war victims are suing London-based bank HSBC under the U.S. Anti-Terrorism Act, demanding compensation from the institution for allegedly providing financial support to Mexican drug cartels.

The lawsuit, filed in the U.S. District Court for the Southern District of Texas earlier this month, could be precedent-setting if plaintiff attorneys successfully convince the judge that Mexican cartels are terrorist organizations and that their violent activities were aided by laundering money through international financial institutions, in this case HSBC.

The lawsuit cites “torture, beheadings, hanging corpses, public assassinations of government officials and journalists, mass executions, kidnappings, attacks on civilians and car bombs” to make a case that cartels, specifically the Sinaloa, Juárez and Zetas, should be classified as terrorist organizations. HSBC, the lawsuit claims, was “knowingly” laundering money for these cartels while they were involved in all that nasty business.

“With full knowledge of the drug cartels’ terrorist activities, the HSBC Defendants (collectively HSBC) — a global network of international financial institutions — knowingly provided continuous and systematic material support to the cartels and their acts of terrorism by laundering millions of dollars for them,” reads the complaint against HSBC Group and its U.S. and Mexico branches. “As a proximate result of HSBC’s material support to the Mexican drug cartels, numerous lives, including those of the Plaintiffs, have been destroyed.”

The plaintiffs listed in the lawsuit include the family members of U.S. Immigration and Customs Enforcement (ICE) Special Agents Jaime Zapata, who was killed, and Victor Avila Jr. who was severely injured, during an ambush by the Zetas Cartel in 2011 while traveling on a highway just outside the northern state of San Luis Potosí. The Zetas reportedly ignored cries that they were U.S. citizens and diplomats. Some of the weapons used to shoot at Zapata and his partner would later be linked to failed U.S. Operation Fast and Furious.

ICE special agent Victor Avila and his wife pay their respects to their fallen partner Jaime Jorge Zapata in Brownsville, Texas, Feb. 22, 2011. (AP Photo/ Delcia Lopez)ASSOCIATED PRESS

ICE special agent Victor Avila and his wife pay their respects to their fallen partner Jaime Jorge Zapata in Brownsville, Texas, Feb. 22, 2011. (AP Photo/ Delcia Lopez)

The complaint goes on to say that HSBC “intentionally implemented criminally deficient anti-money laundering programs” and that many of its employees were bribed by the cartels.

In the past HSBC has been repeatedly accused by authorities of conducting money laundering.

In 2012, the bank paid $1.9 billion to the U.S. government for laundering drug proceeds from Mexican and Colombian cartels.

HSBC hasn’t responded to the specific allegations in the latest claim. The bank says it will defend itself in court.

“We are committed to combating financial crime and have taken strict steps to help keep bad actors out of the global financial system,” HSBC spokesman Rob Sherman told Fusion. “We intend to defend ourselves vigorously against these legal claims.”

Sherman said he couldn’t comment further on the specifics of the case since it is still in the early stages of litigation.

Mexican protest in front of the HSBC bank headquarters in Mexico City, Monday, July 30, 2012. Mexican regulators levied a $28 million fine against the Mexico subsidiary of London-based HSBC bank for failing to prevent money laundering. (AP Photo/Eduardo Verdugo)ASSOCIATED PRESS

Mexicans protest in front of the HSBC bank headquarters in Mexico City, Monday, July 30, 2012. Mexican regulators levied a $28 million fine against the Mexico subsidiary of London-based HSBC bank for failing to prevent money laundering. (AP Photo/Eduardo Verdugo)

The plaintiffs insist there is a direct link between the cartel’s criminal activity and their access to bank financing.

“It is our position that the billions of dollars in support that HSBC provided to the drug cartels knowingly were a proximate cause of the injuries suffered in this case,” plaintiff attorney Richard Elias told Fusion.

Elias says the first part of their legal strategy is to convince the court that Mexican drug cartels are terrorist groups so the case can be tried under the Anti-Terrorism Act.

“There is quite a bit of precedent under the ATA for holding banks liable for providing financial services to terrorist groups,” he added.

In 2014, hundreds of U.S. citizens sued Jordan-based Arab Bank under the Anti-Terrorism Act for allegedly financing members of terrorist group Hamas. A U.S. Federal District Court found the bank liable and the financial institution reached a settlement with the plaintiffs. According to The New York Times, the plaintiffs were “Americans victims of Hamas attacks or relatives of people who were killed.”

According to Bloomberg, the U.S. government recognizes some drug trafficking organizations like Colombia’s FARC as terrorists. However, “the Mexican drug cartels have so far avoided that official label.”

The complaint against HSBC, submitted on behalf of four U.S. families, argues that Mexico’s Sinaloa, Juárez and Los Zetas cartels routinely engage in terrorist acts and have “morphed into highly organized paramilitary organizations with an arsenal of military-grade weapons.”

If the court ultimately rules in favor of the plaintiffs, it could potentially open the door for thousands of drug war victims on both sides of the border to seek compensation from HSBC and other banks accused of laundering illegal proceeds from the drug trade.

Navy soldiers captured Sergio Antonio Mora Cortes, alias "El Toto." According to the Mexican Navy, Cortes is an alleged member of the Zetas drug cartel and the alleged boss of Jorge Zapata, alias "El Piolin," the main suspect in the Feb. 15 killing of ICE Agent Jaime Zapata. (AP Photo/Alexandre Meneghini)ASSOCIATED PRESS

Navy soldiers captured Sergio Antonio Mora Cortes, alias "El Toto." According to the Mexican Navy, Cortes is an alleged member of the Zetas drug cartel and the alleged boss of the main suspect in the Feb. 15 killing of ICE Agent Jaime Zapata. (AP Photo/Alexandre Meneghini)

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