“serious weaknesses” across the automated systems used by HSBC to monitor hundreds of millions of transactions in order to detect potential criminal activity. According to the banking regulator, over the eight years from March 2010 to March 2018, three key failings were identified, including “poor” risk assessment and failure to consider the checks it was using to identify potential threats of money laundering and terrorist financing.
While financial service providers across the globe rely on automated systems to monitor millions of transactions that go through their systems, the FCA found that the systems used by HSBC were letting payments that should have been looked at more closely go through without a thorough investigation. Accordingly, the banking giant is expected to pay a fine of £63.9 million (US$84.3 million) to British regulators on account of these violations.
“HSBC’s transaction monitoring systems were not effective for a prolonged period despite the issue being highlighted on numerous occasions,” Mark Steward, the executive director of enforcement and market oversight at the FCA, said. “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.”
Responding to the findings, an HSBC spokesperson noted that the bank was pleased to resolve the matter with the UK regulators. “As is well known, in 2012 HSBC initiated a large-scale remediation of its financial crime control capabilities,” the spokesperson added. “More recently, as the FCA recognised, HSBC has made significant investments in new and market-leading technologies that go beyond the traditional approach to transaction monitoring.”
