As published on moneymarketing.co.uk, Friday 17 December, 2021.
The Financial Conduct Authority has fined HSBC Bank plc £63,946,800 for “unacceptable” 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.
But the FCA found three key parts of HSBC’s transaction monitoring systems showed serious weaknesses between 31 March 2010 to 31 March 2018.
In particular, the bank 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.
It 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.
Finally, it failed to check the accuracy and completeness of the data being fed into, and contained within, monitoring systems.
HSBC did not dispute the FCA’s findings and agreed to settle at the earliest possible opportunity, which meant it qualified for a 30% discount.
Otherwise, the FCA would have imposed a financial penalty of £91,352,600.
HSBC has undertaken a large-scale remediation programme into its anti-money laundering processes, which was 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.”
The FCA emphasised that its action relates to HSBC’s compliance with UK laws and the matters addressed in its notice were not part of the action taken by the US Department of Justice in 2012.
This is the second fine handed to a big bank by the FCA this week.
On Tuesday (14 December), the regulator announced a £265m fine for NatWest, after it failed to prevent money-laundering of £365m by one firm.