‘Serious weaknesses’ HSBC fined over £63m as it struggles to tackle money laundering

Lloyds banking services down for users across the UK

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The FCA said three key parts of HSBC’s transaction monitoring systems showed “serious weaknesses” over a period of eight years between 2010 and 2018. The bank uses these automated processes to monitor its transactions to identify possible financial crime. In particular the FCA found HSBC had failed to check the accuracy of data being fed into the monitoring systems as well as not testing them appropriately. The bank also failed to consider whether the scenarios used to identify possible money laundering or terrorist financing covered relevant risks until 2014.

Speaking to Express.co.uk whistleblower and anti-corruption campaigner Nicholas Wilson said he was: “Concerned that this has been going on during the DPA (Deferred Prosecution Agreement).”

In 2012 HSBC entered into the DPA with the US Department of Justice for five years after admitting to poor money laundering controls.

The bank paid a $1.9bn (£1.4bn) settlement and in 2013 an independent compliance monitor was appointed.

Over the five years of the DPA HSBC reported it implemented significant reforms to combat financial crime.

The FCA said today its fine did not relate to the US action.

Reacting to today’s fine Mr Wilson added that he believed there “may be more to be discovered”.

HSBC has not disputed the FCA’s findings and has agreed to settle at the earliest opportunity meaning it qualifies for a 30 percent discount.

The penalty otherwise would have been £91,352,600.

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.”

In a statement HSBC said: “We are pleased to resolve this matter, which relates to HSBC’s legacy anti-money laundering systems and controls in the UK.”

“As is well known, in 2012, HSBC initiated a large-scale remediation of its financial crime control capabilities. 

“More recently, as the FCA recognised, HSBC has made significant investments in new and market-leading technologies that go beyond the traditional approach to transaction monitoring. 

“HSBC is deeply committed to combatting financial crime and protecting the integrity of the global financial system.”

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This week NatWest was also fined over anti-money laundering failures after prosecutors told Southwark Crown Court bags of cash containing as much as £700,000 had been deposited by suspected gangs.

The bank pleaded guilty with CEO Alison Rose saying: “We deeply regret that we failed to adequately monitor one of our customers between 2012 and 2016 for the purpose of preventing money laundering.”

As a result the fine was reduced from a potential £400m to £265m.

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