“Serious weaknesses” in transaction monitoring cost HSBC £63.9m penalty

A hefty fine underscores the needthoroughly to document the justification for setting threshold levels, toconduct annual reviews of threshold levels and suppression rules, as well as toconduct regular data reconciliations between transaction and monitoringsystems. Denis O’Connor dissects the failings.

Denis O’Connoris a fellow of both the Institute of Chartered Accountants inEngland & Wales and the Chartered Institute of Securities and Investment.He was a member of the British Bankers’ Association Money Laundering Committeefrom 2003-10 and a member of the Joint Money Laundering Steering Group’s boardand editorial panel between 2010 and 2016. He has been a frequent speaker atindustry conferences on financial crime issues, both in the United Kingdom andabroad.

The Financial Conduct Authority recentlyfined HSBC Bank plc £63.9 million for having inadequate transaction monitoringsystems to identify potential financial crime that contained “seriousweaknesses” between 2010 and 2018. [1] By acknowledging its own failures, HSBCavoided a larger fine of £91.4m. An FCA official observed, “ HSBC’stransaction monitoring systems were not effective for a prolonged perioddespite the issue being highlighted on numerous occasions. These failings areunacceptable and exposed the bank and community to avoidable risks, especiallyas the remediation took such a long time.”