Fresh money laundering fine for HSBC

The City watchdog has fined hSBC £64m for failings in its anti-money laundering systems.

The ‘serious weaknesses’ may have led to financiers of terrorism, fraudsters and modern-day slavers going undetected for eight years.

The Financial Conduct Authority (FCA) found several key flaws in the bank’s antimoney laundering controls from 2010 to 2018.

The watchdog’s investigations found Britain’s biggest bank did not properly consider the scenarios its automatic checks used to pick up the risk of suspicious activity.

hSBC also did not test and update the systems that would flag dubious activity, nor check the accuracy of the data it was collecting for its anti-money laundering policies.

The bank was already under scrutiny after a string of past scandals. The fine is one of several hSBC has been slapped with by regulators for similar shortcomings, including its record £1.2bn penalty in the US in 2012 for helping Mexican drug gangs launder cash.

And it comes days after Royal Bank of Scotland-owner Natwest was fined £265m after it admitted it failed to prevent money-laundering of nearly £400m by one firm.

At hSBC, the FCA said there was evidence that the weaknesses in the UK meant the bank failed to notice suspicious activity on the account of a construction director who also played a leading role in a criminal gang that tried to steal millions by setting up fake companies.

It also failed to detect a customer who was imprisoned for smuggling cigarettes into the UK and was ordered to pay £1.2m by hMRC.

Other glitches meant that a client could increase their spending by up to 500,000pc without raising any red flags on hSBC’s systems.

And retail customers would need their monthly debit activity to increase almost 8,000 times to trigger an alert.

If they were spending £19,000 a month, this would need to balloon to more than £153m before it was noticed. Some of the faults carried on for a long time ‘despite numerous internal and external reports’ that highlighted them.

hSBC said: ‘We are pleased to have resolved this matter. hSBC is deeply committed to combating financial crime and protecting the integrity of the global financial system.’