UK slaps HSBC with $85.2m fine for anti-money laundering failures

Penalty stems from policies and procedures for two of its key automated transaction monitoring systems that were 'not appropriate or sufficiently risk sensitive'

HSBC agreed to resolve the matter and so qualified for a 30 per cent discount on its fine, the FCA said. Reuters
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The Financial Conduct Authority has fined a UK unit of HSBC Holdings 64 million pounds ($85m) after finding “serious weaknesses” in the automated processes it used to monitor suspicious transactions, the latest example of the watchdog’s increasingly assertive stance against the firms it regulates.

HSBC Bank failed to comply with money laundering regulations between 2010 and 2018 because its policies and procedures for two of its key automated transaction monitoring systems were “not appropriate or sufficiently risk sensitive”, the regulator said.

The FCA detailed a series of key failings in the bank’s monitoring software, which meant suspicious transactions were not immediately identified and sent to UK authorities.

One customer had connections to an individual who was already under British police scrutiny over potential suspect money via an unexplained wealth order. Another customer had possible links to a terrorist organisation.

The FCA said that on another occasion in 2011, monitoring alerts were suppressed meaning that all such alerts in Wales were halted. That meant the bank had to retrospectively file 1,780 suspicious activity reports.

HSBC’s failings were considered to be “particularly serious because many of the failings occurred over a prolonged period of time despite numerous internal and external reports highlighting these failings throughout the relevant period”, the regulator said.

“This meant that for a prolonged period of time HSBC failed adequately to detect and report potentially suspicious activity.”

HSBC agreed to resolve the matter and so qualified for a 30 per cent discount on its fine, the FCA said.

Quote
HSBC’s failings were considered to be 'particularly serious because many of the failings occurred over a prolonged period of time despite numerous internal and external reports highlighting these failings throughout the relevant period'
UK Financial Conduct Authority

“We are pleased to resolve this matter, which relates to HSBC’s legacy anti-money laundering systems and controls in the UK,” HSBC said in a statement. “HSBC has made significant investments in new and market-leading technologies that go beyond the traditional approach to transaction monitoring.”

The fine comes after earlier warnings HSBC received from the US Department of Justice about a failure of its US subsidiary to monitor wire transactions out of Mexico, according to the regulator. That prompted the FCA to order a more comprehensive review of its policies.

The FCA is making a concerted effort to enforce money laundering regulations more forcefully. NatWest Group was fined 265 million pounds at a sentencing hearing this week after pleading guilty to failing to prevent money laundering in a case that heard details of hundreds of thousands of pounds being couriered in black garbage bags.

Updated: December 17, 2021, 11:00 AM
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