UK regulators have fined HSBC, the British-based but Asia-focused lending giant, £64 million ($85 million) over “serious weaknesses” in its anti-money laundering (AML) controls.
The Financial Conduct Authority (FCA) said HSBC had a string of AML failures in the UK between 2010 and 2018.
The regulator said HSBC 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.
The bank also neglected to “appropriately test and update the parameters within the systems that were used to determine whether a transaction was indicative of potentially suspicious activity” the FCA added.
“HSBC’s transaction monitoring systems were not effective for a prolonged period despite the issue being highlighted on numerous occasions,” Mark Steward, the FCA’s executive director of enforcement and market oversight, said.
Accuracy and Completeness
The bank also failed to check the accuracy and completeness of the data being fed into, and contained within monitoring systems.
“These failings are unacceptable and exposed the bank and community to avoidable risks, especially as the remediation took such a long time,” Steward added.
According to the FCA decision, one customer had a leading role in a criminal gang involved in an attempt to steal several million pounds by setting up fake construction companies, while another was arrested for involvement in smuggling cigarettes into the UK.
HSBC, responding in a statement, said it had “initiated a large-scale remediation of its financial crime control capabilities” in 2012. “HSBC has made significant investments in new and market-leading technologies that go beyond the traditional approach to transaction monitoring,” it added.
HSBC shares closed up more than 1% in Hong Kong trading on Friday. Its London-listed stocks fell 0.6% in early trading.
The lender’s shares hit a 25-year low in September on reports that it, and other banks, had flagged billions of dollars of suspicious transactions to US authorities.
- George Russell
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