FCA Fines HSBC £64 Million for AML Lapses

The UK’s Financial Conduct Authority (FCA Financial Conduct Authority (FCA) The Financial Conduct Authority (FCA) is the largest financial regulator for all financial markets in the United Kingdom (UK).The UK regulator is responsible for the conduct of firms authorized under the Financial Services and Markets Act 2000. Moreover, the FCA is also responsible for the regulation of behavior in retail and wholesale financial markets, supervision of the trading infrastructure that supports those markets, and the prudential regulation of firms not regulated by the PRA. Its rol The Financial Conduct Authority (FCA) is the largest financial regulator for all financial markets in the United Kingdom (UK).The UK regulator is responsible for the conduct of firms authorized under the Financial Services and Markets Act 2000. Moreover, the FCA is also responsible for the regulation of behavior in retail and wholesale financial markets, supervision of the trading infrastructure that supports those markets, and the prudential regulation of firms not regulated by the PRA. Its rol Read this Term) has imposed more than £63.9 million in fines on the retail lender, HSBC for critical lapses in anti-money laundering processes, the regulator announced on Friday.

To monitor hundreds of millions of transactions a month and identify financial crimes, HSBC is using automated processes. But, the British regulator has found serious weaknesses in three key parts of the bank’s transaction monitoring system, which were there between March 31, 2010, and March 31, 2018.

“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.

Serious Failures

The regulator detailed that the bank failed to consider the risk relevance of money laundering Money Laundering Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laund Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laund Read this Term and terror financing scenarios until 2014 and failed to carry out additional risk assessments after 2016.

Further, it did not appropriately test and update the parameters of the system that were used to determine suspensions against any transaction and failed to check the accuracy and completeness of monitoring data.

“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,” Steward added.

The original penalty amount brought against HSBC was more than £91.3 million, but the bank received a 30 percent discount as it did not dispute any of the findings of the regulator and decided to settle the charges.

Furthermore, the bank has undertaken an FCA-supervised large-scale remediation program to strengthen its anti-money laundering processes.

Meanwhile, the NatWest bank recently was ordered to cough up £264.8 million in fines for its severe lapses in complying with British anti-money laundering regulations.