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HSBC fined £64m for anti-money laundering failures

HSBC fined £64m for anti-money laundering failures

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

HSBC used automated processes to monitor hundreds of millions of transactions a month to identify possible financial crime. 

However, the City watchdog said over a period of eight years from March 31, 2010 to March 31, 2018, HSBC’s transaction monitoring systems showed “serious weaknesses”.

In particular, the FCA said HSBC failed to consider whether the scenarios used to identify indicators of money laundering or terrorist financing covered relevant risks; to test and update the systems that flagged whether a transaction was of suspicious activity; and to check the accuracy and completeness of the data it was gathering for anti-money laundering checks.

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.”

HSBC did not dispute the FCA’s findings and agreed to settle, which meant it qualified for a 30 per cent discount. 

The fine would have been just over £91m if the bank had not agreed.

In a decision notice dated to December 14, the FCA said it considers HSBC’s failing to be particularly serious.

“Many of the failings occurred over a prolonged period of time despite numerous internal and external reports highlighting these failings throughout the relevant period,” it said.

“This meant that for a prolonged period of time HSBC failed adequately to detect and report potentially suspicious activity; these reports may have assisted law enforcement in their active investigations; 

“Relevant guidance was issued by the authority both before and during the relevant period in which it stressed the importance of maintaining appropriate financial crime controls.”

HSBC has since undertaken a “large-scale remediation programme” into its anti-money laundering processes, which was supervised by the FCA.

Yesterday (December 17), Natwest was also fined £265m at a court hearing after it admitted it had failed to prevent money laundering.

sonia.rach@ft.com

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