HSBC Australia

HSBC Fined £64M for AML Faillings, But A Giant Slap Still Looms

HSBC has been fined by the UK Financial Conduct Authority an amount of £63,946,800 for failings in its anti-money laundering processes.

FCA Finds Weaknesses in HSBC AML System

The bank has settled as soon as possible in order to obtain the 30% discount the regulator offers to motivate firms to refrain from contesting the charges and penalties.

According to the FCA, the bank had three key failures in its transaction monitoring systems after a review of the infrastructure over a period of eight years from 31 March 2010 to 31 March 2018.

The HSBC automated system monitors hundreds of millions of transactions a month, but it seems to have failed to:

– consider whether the scenarios used to identify indicators of money laundering or terrorist financing covered relevant risks until 2014;
– carry out timely risk assessments for new scenarios after 2016;
appropriately test and update the parameters within the systems that were used to determine whether a transaction was indicative of potentially suspicious activity;
– check the accuracy and completeness of the data being fed into, and contained within, monitoring systems.

In response to the FCA findings, HSBC has undertaken a large-scale remediation programme into its AML system, which was supervised by the FCA.

“HSBC’s transaction monitoring systems were not effective for a prolonged period despite the issue being highlighted on numerous occasions. These failings are unacceptable and exposed the bank and community to avoidable risks, especially as the remediation took such a long time. HSBC continued their remediation to address these weaknesses after the relevant period”, said Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA.

HSBC Paid $1.9B In 2012, But 2021 Report Found Network Laundered $4.2B

HSBC has paid a much stiffer fine back in 2012 after the US Justice Department charged the bank for AML failings that allowed Mexican and Colombian cartels to launder over $800 million. The total amount paid by HSBC in 2012 was $1.9 billion.

That AML issue may be coming back to bite the bank. A redacted internal HSBC report shows that the bank uncovered a previously undisclosed multibillion-pound network as early as 2016.

The suspected money laundering network received $4.2bn (£3bn) worth of payments, indicating that the bank might not have lived up to its deal of cleaning up its act and improve its AML system.

The network involved 92 HSBC Hong Kong accounts that received $4.2bn worth of payments between 2014 and 2017. When the report was circulated in 2017, 60 of these accounts were still open.