HSBC fined £64m for AML issues in UK: Pocket change compared to $1.9b fine in US

Rick Steves

HSBC has decided to settle asap, thus qualifying the bank for a 30% discount. Otherwise, the FCA would have imposed a financial penalty of £91,352,600.

The Financial Conduct Authority has fined HSBC £63,946,800 for failings in its anti-money laundering processes, the UK’s financial watchdog announced.

The automated processes to monitor hundreds of millions of transactions a month to identify possible financial crime seem to have failed the bank over a period of eight years from 31 March 2010 to 31 March 2018.

Absent the 30% discount, fine would have been £91,352,600

According to the FCA, three key parts of HSBC’s transaction monitoring systems showed serious weaknesses as the bank failed to:

– consider whether the scenarios used to identify indicators of money laundering or terrorist financing covered relevant risks until 2014, and 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.

HSBC has decided to settle asap, thus qualifying the bank for a 30% discount. Otherwise, the FCA would have imposed a financial penalty of £91,352,600.

Since the FCA found those weaknesses, HSBC began a remediation programme into its anti-money laundering processes.

Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said: “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”.

“We are pleased to resolve this matter, which relates to HSBC’s legacy anti-money laundering systems and controls in the UK. HSBC is deeply committed to combating financial crime and protecting the integrity of the global financial system”, an HSBC spokesperson said in a statement.

Pocket change when compared to record $1.9b fine in 2012

In 2012, HSBC was fined a record $1.92 billion in fines to U.S. authorities after serious anti-money laundering faillings that helped Mexico’s Sinaloa cartel and Colombia’s Norte del Valle cartel to launder $881 million.

The bank acknowledged it failed to maintain an effective program against money laundering and failed to conduct basic due diligence on some of its account holders.

The bank agreed to forfeit $1.256 billion and retain a compliance monitor as well as pay $665 million in civil penalties to regulators.

“We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again. The HSBC of today is a fundamentally different organization from the one that made those mistakes,” HSBC Chief Executive Stuart Gulliver said at the time.

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