HSBC fined nearly US$64 million for failings in AML systems

The UK’s Financial Conduct Authority (FCA) has fined HSBC Bank £63.9 million (US$84.4 million) for failings in its anti-money laundering (AML) processes.

Despite the bank’s use of automated processes to monitor hundreds of millions of transactions a month to identify possible financial crime, the FCA found that three key parts of HSBC’s transaction monitoring systems showed serious weaknesses over a period of eight years up to March 2018.

Bank failings

The UK regulator says HSBC failed to consider whether the scenarios used to identify indicators of money laundering or terrorist financing covered relevant risks until 2014 and did not carry out timely risk assessments for new scenarios after 2016.

The bank also failed to appropriately test and update the parameters within the systems that were used to determine whether a transaction was indicative of potentially suspicious activity.

It also did not check the accuracy and completeness of the data being fed into, and contained within, monitoring systems.

Remedial action

HSBC did not dispute the FCA’s findings and agreed to settle at the earliest possible opportunity, which meant it qualified for a 30 per cent discount. Otherwise, the FCA would have imposed a financial penalty of more than £91 million.

Under FCA supervision, HSBC has now undertaken a large-scale remediation programme into its anti-money laundering processes.

FCA comment

“HSBC’s transaction monitoring systems were not effective for a prolonged period despite the issue being highlighted on numerous occasions,” according to the FCA’s executive director of enforcement and market oversight, Mark Steward.

“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,” he concluded.


Categories: Trade Based Financial crimes News

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