Release Date: 17th December 2021
To access the original FCA document, click here.
Summary
HSBC Bank plc was fined £63,946,800 by the Financial Conduct Authority (FCA) for failing to comply with Money Laundering Regulations (ML Regulations) between 31 March 2010 and 31 March 2018. The fine was reduced from £91,352,600 due to HSBC’s agreement to an early settlement. The FCA found that HSBC’s automated transaction monitoring systems were inadequate, lacking effective risk-sensitive policies and procedures to detect and prevent financial crime, including money laundering and terrorist financing.
Key Takeaways for Other Firms:
- Scenario Coverage:
- Ensure transaction monitoring scenarios cover all relevant risk indicators.
- Conduct timely risk assessments and address design issues promptly to avoid delayed alerts.
- Parameters:
- Regularly test and update thresholds to accurately identify suspicious activities.
- Avoid setting thresholds that make it impossible to detect suspicious transactions.
- Understand and manage rules that might suppress potential suspicious activities.
- Data Integrity:
- Maintain accurate and complete data in transaction monitoring systems.
- Keep an up-to-date list of correspondent banking relationships.
- Implement systems to check data completeness and accuracy before feeding it into monitoring systems.
HSBC failed to maintain adequate controls and processes, even after recognizing deficiencies in 2010 and starting a remediation program in 2012. Despite investments in improvements, significant weaknesses persisted throughout the period.
In conclusion, the FCA’s action against HSBC underscores the importance of robust and continuously updated financial crime controls. Firms must ensure their systems are comprehensive, regularly tested, and accurately maintained to effectively detect and deter financial crime, thereby avoiding substantial penalties and potential reputational damage.
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