HSBC fined £64m for anti-money laundering failings

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Banking giant HSBC has been fined £63.9m by the UK’s financial regulator for “unacceptable failings” of its anti-money laundering systems.

Financial Conduct Authority (FCA), stated that HSBC’s safeguards against financial crime had been identified several times prior to action being taken.

The bank has not disputed the findings and agreed to settle, resulting in its fine being being cut from £91m.

The FCA stated that HSBC’s failures span a period between 2010 and 2018.

The regulator stated that there had not been adequate monitoring of money laundering or terrorist financing scenario until 2014 and that “new scenarios” were being assessed poorly after 2016.

The largest bank in Europe was found to have used inappropriate testing, and not checked the completeness and accuracy of its data.

Mark Steward, executive director of FCA, stated that “HSBC’s transactions monitoring systems weren’t effective for a long period despite being raised on multiple occasions.”

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He said that these failings were unacceptable, and the bank and the community faced avoidable risk. The remediation was particularly slow.

Suspicious activity

In its report on HSBC, the FCA cites several examples of bad controls. These include failing to detect suspicious activity in the account of a building director. This construction director also had a key role in a criminal gang that tried to steal millions by creating fake companies.

This person was convicted of VAT fraud, and sentenced to time in prison.

HSBC also failed to detect a customer imprisoned for smuggling cigarettes into the UK and ordered to pay £1.2m by the HMRC tax office, where the bank missed “a sustained period of unusual activity,” the FCA said.

HSBC released a statement saying that it was happy to settle the matter. It concerns HSBC’s anti-money laundering legacy systems in the UK.

“HSBC is fully committed to fighting financial crimes and protecting the integrity the global financial system.”

This is not the first instance of HSBC being fined by the FTC for money laundering.

In 2012, it paid $1.9bn (£1.4bn) after an investigation by the US Department of Justice for failing to prevent laundering by Mexican drug cartels. US regulators agreed that the bank would be under surveillance for five years.

FCA stated that its fine had nothing to do with the US action.

On Monday, banking rival NatWest was fined £265m after admitting it failed to prevent money-laundering of nearly £400m by one firm.

A gold trading firm suspected of money-laundering deposited £700,000 in cash into one NatWest branch in black bin bags.

NatWest stated that it regrets not properly monitoring the customer.


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