HSBC fined almost £64m for money laundering failures by UK’s financial watchdog

( via– Fri, 17th Dec, 2021) London, Uk – –

The banking giant has previously been hit with a record penalty by the US authorities over the movement of cash from Mexican drug cartels.

The UK’s financial watchdog has fined HSBC almost £64m for money laundering failures.

The Financial Conduct Authority (FCA) issued the penalty after finding “serious weaknesses” in the banking giant's automated systems used to monitor hundreds of millions of transactions a month to identify possible criminal activity.

It highlighted three key failings which were found over the eight years from March 2010 to March 2018.

HSBC was also found to be inadequately checking the accuracy and completeness of the data being fed into its monitoring systems.

HSBC did not dispute the watchdog’s findings, and agreed to settle at the earliest possible opportunity.

As a result, the fine was reduced from £91m to £63.9m

The bank has a history of sanctions relating to its money laundering controls.

In 2017, HSBC was told to pay $1.9bn (£1.4bn) to settle a money-laundering probe by US authorities – the largest penalty of its kind ever paid by a bank.

The investigation found Europe's largest bank failed to prevent Mexican drug cartels from washing hundreds of millions of dollars.

But despite this scrutiny, regulators say HSBC continued to fail in its responsibility to prevent money laundering.

Mark Steward, executive director of enforcement and market oversight at the FCA, said: “HSBC’s transaction monitoring systems were not effective for a prolonged period despite the issue being highlighted on numerous occasions.

“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.”

Last week, NatWest was fined £265m after it admitted a string of anti-money laundering failures related to the activities of a suspected “drugs gang” behind deposits worth hundreds of millions of pounds.

Prosecutors told London's Southwark Crown Court that bags of cash were taken to 50 branches between 2012 and 2016 and deposited into accounts linked to Bradford-based jeweller Fowler Oldfield.

The company was suspected, according to the FCA, of being a front for an illegal drugs operation that was eventually shut down following a police raid.

The court heard that one person in Walsall had even arrived at a branch with £700,000 in cash in bin bags – so much that they broke and the money had to be repacked in hessian bags.

By Ed Clowes, business reporter