HSBC’s penalty in SA ‘no surprise’

Peter Hain, the senior British legislator who sparked a criminal probe into HSBC’s ties to the Gupta family, says he is not surprised the London-based lender has been fined in SA for having lax moneylaundering controls.

The SA Reserve Bank said at the weekend it had fined HSBC’s local business R15m for weaknesses in its processes that could fail to detect money laundering and terrorism financing. The fine follows an inspection in 2016.

The Bank’s Prudential Authority ordered HSBC to fix the problems and pay the fine, half of which would be suspended for three years subject to the bank adhering to certain conditions.

“It should be noted that the administrative sanctions were not imposed because HSBC was found to have facilitated transactions involving money laundering or the financing of terrorism,” the Prudential Authority said. But Hain, Labour Party member of the House of Lords who grew up in SA, said based on HSBC’s handling of Gupta accounts, the penalty was not surprising. The controversial Gupta family, along with ex-president Jacob Zuma’s son Duduzane is at the centre of state capture allegations.

“I think HSBC have been incredibly complacent about the way they’ve managed SA accounts. There’s no question that the Guptas had used their accounts.”

A year ago, Hain told British legislators that HSBC’s SA branch had alerted the bank’s London office about the Guptas’ transfers of money from SA to the UK and other markets.

But the London unit chose to ignore those warnings, Hain said at the time. He told Business Day on Sunday the UK’s Financial Conduct Authority was still “ploughing through a lot of evidence” as part of a probe into the transfers. He said he had provided investigators with detailed information.

Hain told the House of Lords in November 2017 that money laundering linked to Jacob Zuma and the Gupta brothers had been “painful for me to witness”. —