HSBC Bank fined £63.9m over anti-money laundering failings

The Financial Conduct Authority (FCA) has fined HSBC £63.9m for failings in its anti-money laundering processes and compliance with UK laws.

HSBC did not dispute the FCA’s findings and agreed to settle at the earliest possible opportunity. This means it qualified for a 30% discount, preventing an imposed financial penalty of £91.3m.

HSBC used automated processes to monitor millions of transactions a month to identify possible financial crime. However, the FCA found that three parts of HSBC’s transaction monitoring systems showed “serious weaknesses” over a period of eight years from 2010 to 2018.

The FCA said HSBC failed to consider whether the scenarios used to identify indicators of money laundering or terrorist financing covered relevant risks, and it failed to carry out timely risk assessments for new scenarios after 2016.

Additionally, the authority said HSBC failed to appropriately test and update the parameters within the systems it used to determine whether a transaction was indicative of potentially suspicious activity.

It also found that the bank didn’t check the “accuracy and completeness” of the data being fed into, and contained within, monitoring systems.

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

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.”