HSBC fined £63.9m for AML failures

The Financial Conduct Authority (FCA) has fined HSBC Bank (HSBC) £63.9m for failings in its anti-money laundering (AML) processes.

HSBC used automated processes to monitor hundreds of millions of transactions a month to identify possible financial crime. However, the FCA found that three key parts of HSBC’s transaction monitoring systems showed serious weaknesses over a period of eight years from 31 March 2010 to 31 March 2018.

FCA findings show that 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;
  • 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 not disputed the FCA’s findings and has agreed to settle at the earliest possible opportunity, affording HSBC a 30% reduction. In the event of dispute or non-settlement the FCA reports that a financial penalty of £91,352,600 would have been imposed.

HSBC has undertaken a large-scale remediation programme into its AML processes, supervised by the FCA.

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.”

This is the second time in recent months that a major bank has been fined for AML failures. Natwest Bank was fined £264.8m last week following convictions for three offences of failing to comply with money laundering regulations.

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