Despite best efforts, HSBC can’t right its AML compliance program
The United Kingdom’s largest bank, HSBC, is facing yet another challenge related to its anti-money laundering (AML) compliance program. In the latest in HSBC’s series of AML missteps, the bank is being accused by U.S. regulators of failing to take action over customers reportedly linked to terrorism. In a draft report that HSBC suspects was leaked by a bank insider, 13 HSBC customers were named as having links to jihadists in Syria—12 of whom had ties to ISIS.
HSBC may well have been aware of the 13 individuals’ alleged illegal activity; however, at this point it has not yet been determined when the bank realized the problem and if it then continued allowing the individuals to use the bank’s services anyway. While there is some speculation that intelligence agencies may have requested that the bank maintain the accounts in order to track and monitor the account activity, with more than 17 million customers in the UK alone, some in the industry wonder if the bank’s KYC (know your customer) systems are outdated or if the company’s ethics are in question. Regardless, given the bank’s recent track record, it’s clear that its AML compliance program is struggling.
In recent years, HSBC has found itself making news headlines repeatedly for AML-related infractions, including:
- Paying a record-setting fine of $1.9 billion USD to U.S. regulators to settle accusations of a “blatant failure” to implement AML controls and for knowingly disregarding U.S. sanctions
- Facing a lawsuit filed by the families of Americans who were murdered by Mexican drug cartels that laundered money through HSBC, which allegedly provided “continuous and systematic support” to the cartels by being aware of and allowing their money laundering
- Dedicating more than $680 million to its Financial Compliance program—but still facing significant compliance challenges
- Narrowly avoiding criminal charges for letting millions be laundered by drug traffickers and terrorists
Given the size of HSBC, it’s unlikely that it will ever vanish completely from the AML compliance headlines. There are, however, achievable steps it and other financial institutions can take to make their compliance programs more effective, such as implementing the CaseWare AML Compliance solution. To learn more about how the platform—which has KYC, transaction monitoring, sanctions screening and regulatory reporting capabilities—can help your organization avoid HSBC’s missteps, watch the recording of our recent webinar, 'Sanctions Risk – What’s the Problem?'
About Andrew Simpson:
Andrew Simpson has close to two decades of experience in the information systems audit and security business; specifically data analytics, interrogation and forensics. He is a regular contributor to various auditing conferences and is acknowledged as an expert on continuous controls monitoring and revenue assurance.
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