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HSBC Bank FCA Investigation Overview:
- Who: The Financial Conduct Authority (FCA) has imposed a fine of £63.9 million on HSBC Bank plc.
- Why: The FCA ruled HSBC did not properly monitor its banking systems for instances of fraud and other financial crimes.
- Where: HSBC is a British multinational investment bank, and the second largest bank in Europe.
The Financial Conduct Authority (FCA) has fined HSBC Bank plc £63.9 million after finding the investment bank and financial services holding company failed to properly monitor its systems.
HSBC uses automated processes to monitor and sift out instances of financial crimes in hundreds of millions of monthly transactions in its systems.
The FCA determined, however, that the automated processes used by HSBC failed to properly check the accuracy and completeness of data for an eight-year period between March 2010 to March 2018.
Further, the processes were not properly updated or tested and were unable to conduct risk assessments for scenarios that were relevant after 2016, according to the FCA.
HSBC Also Failed To Consider Whether Its Processes Were Focused On Relevant Risks, FCA Says
The FCA says HSBC also failed until 2014 to even consider whether or not its processes targeting money laundering or terrorist financing were focused on relevant risks.
“HSBC’s transaction monitoring systems were not effective for a prolonged period despite the issue being highlighted on numerous occasions,” said Mark Steward, FCA’s executive director of enforcement and market oversight, in a statement. “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 HSBC decided not to dispute the FCA’s findings and agreed to pay the penalty as soon as possible in order to earn a 30% discount on the fine, according to the agency.
Had HSBC prolonged paying the penalty or disputed the findings, it would have been subject to an FCA fine of more than £91 million.
The bank has also since undergone a revamp of its monitoring processes for money laundering, an undertaking which the FCA oversaw.
HSBC was the target of a class action lawsuit filed in November that alleged the bank failed to properly alert the authorities or properly warn other banks after discovering one of its customers was running a ponzi scheme using its bank accounts.
Have you done any banking or investing with HSBC Bank? Let us know in the comments!
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