HSBC was fined £64 million and harshly criticized by UK regulators for “serious weaknesses” in its anti-money laundering controls over an eight-year period.
The Financial Conduct Authority said that between March 2010 and March 2018, HSBC experienced a string of AML errors. These include failing to properly consider the scenarios it was using to pose a risk of suspicious activity, failing to check and update its system of flagging for suspicious activity, and failing to check its correctness. accuracy and completeness of the data it is collecting for AML checks.
Mark Steward, executive director of market enforcement and oversight at the FCA, said: “HSBC’s transaction monitoring system has been ineffective for a long time despite the issue being raised many times. “These flaws are unacceptable and banks and communities face avoidable risks, especially when remediation takes a long time.”
The fine would be just over £91m without the 30% discount for early payment.
In a statement, HSBC said it had “started a large-scale remediation of its ability to control financial crime” in 2012.
“Recently, as the FCA recognizes, HSBC has made significant investments in new and market-leading technologies that go beyond the traditional approach to transaction monitoring. HSBC is deeply committed to fighting financial crime and protecting the integrity of the global financial system,” the bank added.
Among the incidents covered by the FCA report was an HSBC client who combined his role as a director of a construction company with leading a criminal gang. This criminal enterprise has been involved in attempts to steal several million pounds by setting up fake companies.
Although the client had set up an HSBC account with an expected annual income of £40,000, the bank failed to take action as he received hundreds of thousands of pounds in additional income, including £120,000 in just one day in April 2010.
“This trading activity is clearly outside the activity expected for [the customer’s] FCA said in its report. “These payments are all round number transactions. . . HSBC did not specify that they needed supervision until 2014.”
In another example, an HSBC customer was jailed in connection with the smuggling of cigarettes into the UK and was ordered to pay HMRC £1.2 million in 2013.
In this case, the FCA said, “there was a continuous period of unusual activity in both incoming and outgoing transactions on [customer’s HSBC] but no transaction monitoring alerts are triggered”.
In 2012, HSBC was fined $1.9 billion and signed deferred prosecution agreements with US regulators over its role in baptizing at least $881 million in two of the deadliest drug cartels in the world. Latin America.
A US investigation into HSBC’s Mexico business has determined that the cartels even design specially shaped money boxes to fit the exact dimensions of the trading window at branches of HSBC.
The scandal was one of the biggest in the bank’s 156-year history.
https://www.ft.com/content/304f7abb-981d-47c1-bf89-4168597b9443 HSBC fines £64m for failing to fight money laundering