‘Failings’ in HSBC Bank’s AML System Lead to $84M Fine

The U.K.’s Financial Conduct Authority (FCA) has fined HSBC Bank £63,946,800 ($84.7 million) for “failings” in its anti-money laundering (AML) system.

The FCA reported the fine on its website on Friday (Dec. 17), saying that while HSBC used automated processes to monitor possible financial crime, the authority found “serious weaknesses” over an eight-year period between 2010 and 2018.

“HSBC’s transaction monitoring systems were not effective for a prolonged period despite the issue being highlighted on numerous occasions,” Mark Steward, executive director of enforcement and market oversight at the FCA. “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 authority said HSBC 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.”

In addition, the bank did not properly test and update the parameters in its system to determine whether a transaction was suspicious, nor did it check the accuracy and completeness of the data within its monitoring systems.

The FCA says HSBC did not dispute the investigation’s findings and agreed to settle as soon as possible, which lowered the fine significantly. Had they not settled, the FCA’s fine would have been £91,352,600, or $120.9 million.

Read more: FCA: Surge in Number of Banks Filing Financial Crime Reports

In November, the FCA reported that banks and other financial institutions were reporting record levels of suspicious activity reports (SARs).

SAR filings have been on the rise each year since 2017, the FCA said, a 16% increase between 2017 and 2020. Most of those reports – 804,105 – came from the retail banking sector, followed by the retail lending space at 204,374 and wholesale financial markets at 12,062.