The FCA imposed, this Friday, a £63.9 million fine on the major EU banking institution HSBC for breaching AML processes.
Currently, all of HSBC’s transaction monitoring processes are automated, which also includes the identification of potential financial crimes. The FCA detected 3 key issues that have been left unchecked, which have brought some serious heat to the bank.
- The first of three issues has been the bank’s ignorance when it comes down to its transactions monitoring systems which have been dubbed ineffective even after being called out at such on previous occasions.
- The bank was also targeted for the failure of consideration where risk of money laundering and terror financing are concerned. HSBC previously had not considered these risks prior to 2014, and had continued to do so post 2016.
- Thirdly, the broker failed to test and update the system’s parameters, especially those functions that were crucial for detecting suspensions, while also failing to determine the accuracy of the monitoring data. The FCA commented on the third part that it clearly exposed banks and users to risks.
Preliminary, the intended penalty was £91.3 million, but HSBC was very understanding and decided to settle all charges without dispute, and as a result, received a 30 percent discount.
HSBC was quick to respond and is currently underway with an FCA-supervised redemption program, whose goal is to solidify the bank’s AML program.