The Financial Conduct Authority (FCA) has fined HSBC Bank £63,946,800 for failings related to its anti-money laundering processes.
According to the FCA, HSBC used automated processes to monitor hundreds of millions of transactions a month to identify possible financial crime. However, the FCA round that three key parts of its transaction monitoring systems demonstrated ‘serious weaknesses’ over a period of eight years – from March 2010 to March 2018.
HSBC was found also to have failed to consider whether the scenarios used to identify indicators of money laundering or terrorist financing covered relevant risks until 2014 as well as carrying out timely risk assessments for new scenarios after 2016.
The bank also did not 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.
HSBC did not dispute the findings of the FCA and agreed to settle at the earliest possibility opportunity. This meant the bank qualified for a 30% discount. If it hadn’t of taken this route, the FCA would have imposed a financial penalty of £91.3m.
The bank stated it has undertaken a large-scale remediation program into its AML processes, which have been supervised by the FCA.
FCA executive director of enforcement and market oversight Mark Steward 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.”
NatWest recently also suffered a similar fate to HSBC, when it was hit with a £264m fine for three accounts of money laundering failures.
Copyright © 2021 RegTech Analyst
Copyright © 2018 RegTech Analyst