FSA demands top-level AML supervision at HSBC in wake of $1.9bn fines
The Financial Services Authority has instructed HSBC to set-up a board-level committee with a mandate to oversee matters relating to anti-money laundering, sanctions, terrorist financing and proliferation financing.
The bank will also have to appoint an FSA-approved group money laundering reporting officer “with responsibility for ensuring that systems and controls are in place across the group, to ensure it is in compliance with all relevant legal and regulatory requirements”.
On top of that, it will have to employ an independent monitor to “oversee compliance with UK anti-money laundering, sanctions, terrorist financing and proliferation financing requirements and to provide independent reporting to the HSBC Board committee and regulators”.
As lead regulator for the HSBC Group globally, the FSA is responding to the issues in respect of HSBC’s compliance with anti-money laundering rules and US sanctions requirements that saw it being fined a record $1.9 billion in a settlement over money laundering charges this week.
The FSA says it worked closely with the US authorities and this action “is separate to, but coordinated with the actions taken by them”.
Commenting on its agreement with the US authorities – which is technically a five-year Deferred Prosecution Agreement – HSBC said that it has been improving its controls.
“We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again. The HSBC of today is a fundamentally different organisation from the one that made those mistakes. Over the last two years, under new senior leadership, we have been taking concrete steps to put right what went wrong and to participate actively with government authorities in bringing to light and addressing these matters,” said Stuart Gulliver, group chief executive.
The Department of Justice has recognised these efforts in the DPA, the bank says, quoting the DoJ as saying: “Management has made significant strides in improving ‘tone from the top’ and ensuring that a culture of compliance permeates the institution. The efforts of management have dramatically improved HSBC Bank USA’s and HSBC Group’s Bank Secrecy Act Anti-Money Laundering and Office of Foreign Assets Control compliance programs.”
