• By: Staff Editor

HSBC and Money Laundering: A Constant Battle

HSBC Holdings plc, the world's third largest bank by assets, has been in the news recently for money laundering in Geneva. HSBC has agreed to pay 40 million Swiss francs, the biggest financial penalty ever imposed by the Geneva authorities. The Swiss unit of the bank came into limelight when HSBC’s former IT worker Herve Falciani leaked details about clients involved in alleged tax avoidance to the French government. The French authorities later handed the information to tax authorities around the world. Geneva authorities raided HSBC offices in February 2015 after several media organizations published details of how HSBC’s Swiss unit allegedly helped wealthy clients avoid taxes. The U.S., French and Belgian authorities are still investigating tax evasion at the bank.

HSBC being penalized for money laundering is not new. It has previously faced allegations of money laundering from authorities in several countries including United States, India and Argentina. In December 2012, HSBC was hit with a massive USD 1.9 billion fine, the largest fine under the Bank Secrecy Act, after it helped Latin American drug cartels launder their money. According to Bloomberg, the bank was found guilty of not properly monitoring more than USD 670 billion in wire transfers and more than USD 9.4 billion in purchases of American currency at HSBC Mexico. The bank admitted that they didn’t have strong anti-money laundering programs in place and failed to conduct basic due diligence on some of its account holders.

Going further back, in 2003 and 2010, U.S. watchdogs ordered HSBC to strengthen its anti-money laundering practices. The problems identified included: failure to file timely suspicious activity reports with U.S. law enforcement; failure to conduct any due diligence for opening accounts for HSBC affiliates; and inadequate and unqualified AML staffing, resources, and leadership.

HSBC is not alone in being levied fines for laundering money. A number of others banks have also been in the news lately for violating AML laws. In one of the most recent cases Deutsche Bank was fined $8.4m by Dubai Financial Services Authority (DFSA) for inadequate controls over money laundering. In yet another case, J.P. Morgan Chase Bank, N.A. was fined $461 million by FinCEN in 2014 for willfully violating the suspicious activity reporting requirements of BSA.

The above instances clearly show that banks worldwide face challenges in implementing strong anti-money laundering controls and ensuring AML compliance. The growing enforcement against money laundering has made it clear that banks and other financial organizations cannot afford to go easy on their anti-money laundering programs. It has made it essential for financial institutions to become familiar with the money laundering process, how it works and the ways to detect and prevent it. 

AML compliance is a multi-faceted and complex subject. ComplianceOnline offers AML compliance training programs in various formats, including: live webinars, training recordings, in-person seminars, and customized organization-level in-person seminars.

To learn more check out the following Trainings:

Managing an Effective AML Compliance Program

BSA/AML/OFAC Risk Assessments - Are You Doing Them Correctly

A Practical Approach to Managing an Anti-Money Laundering Program

How to Manage an Effective AML Audit Program

How to Think Like a Crook - Money Laundering Preventions

Best Practices to Combat Anti Money Laundering Risk

Red Flags of Money Laundering