The FCA found that there were three key failures in the bank’s transaction monitoring system over a period of eight years from 2010 to 2018.
The three key failures were not considering if scenarios used to identify indicators of money laundering or terrorist financing covered relevant risks until 2014, and only carrying out timely risk assessment for new scenarios after 2016.
HSBC also failed to appropriately test, and update system parameters used to identify whether transactions was indicative of potentially suspicious activity.
The bank also failed to check the accuracy and completeness of data going into and stored in its monitoring system.
HSBC did not dispute the findings and agreed to settle, therefore securing a 30 per cent discount on the fine.
It has since undergone a large-scale remediation programme into its anti-money laundering processes, overseen by the regulator.
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.”
A HSBC spokesperson said: “We are pleased to resolve this matter, which relates to HSBC’s legacy anti-money laundering systems and controls in the UK. As is well known, in 2012, HSBC initiated a large-scale remediation of its financial crime control capabilities. 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. HSBC is deeply committed to combatting financial crime and protecting the integrity of the global financial system.”
