AML scrutiny for HSBC continues


page image

U.K.’s FCA joins in AML Compliance analysis of banking giant

HSBC is in the news on two fronts this week—profits of the international banking giant over the last year fell far below expectations, and there are new concerns about old problems with AML Compliance and the tone from top.

Reuters reported on the profit downturn, and only briefly mentioned the AML issues. The Telegraph took a closer look at the issue of AML controls and a new investigation by Britain’s Financial Conduct Authority (FCA).

The FCA “commissioned a skilled person review – a so-called ‘166 report’—into the lender during the final quarter of last year, a type of enforcement action that could result in the bank being hit with a fine,” according to the Telegraph report. This timing appears to have coincided with news that the U.S.-required independent monitor, Michael Cherkasky, continues to have concerns about AML controls at the bank.

The Telegraph reports that HSBC head Stuart Gulliver asserts the FCA scrutiny is routine: ““What the FCA are doing is running through a process to verify whether the checks and balances and controls we have in place in the UK are sufficiently fit for purpose,” he said. “It’s quite normal for bank of our size and scale with 37 million customers for us to find amongst our customers instances of money laundering, either that we have ourselves identified, the monitor has identified, or our own regulators have identified.”

The bank was most recently in the news for AML and terrorist-financing concerns in November of 2016 when a draft report of Michael Cherkasky was leaked to the media—allegedly by a staff member within HSBC, according to the Financial Times. Cherkasky’s final annual report for 2016 has not yet been made public.

The analysis of Samuel Rubenfeld of the Wall Street Journal’s Morning Risk Report was more critical than’s HSBC boss Gulliver’s take. Rubenfeld quotes Washington, D.C.-based AML expert Ross Delston as describing the AML buy-in among top leaders as negligible and occurring “with a gun to the head” in the form of the independent monitor that was a part of the bank’s 2012 settlement for financial crimes related to money laundering for Mexican drug cartels.

Delston related to Rubenfeld that outside hires of high-profile financial-crime fighters like Jennifer Shasky Calvery, formerly the top AML official in the U.S. Treasury Department, do not result in “the kind of change in course that’s long-lasting or penetrates the organization as a whole.” Rather, that kind of change requires an embrace of AML controls and attitudes by top leadership in an institution.

Delston noted further that a common strategy for the big multinational institutions that run afoul of AML and financial-crime regulations is to wait out their various regulatory agreements and settlements with largely surface changes and then return to business as usual.

[February 22, 2017]


SURETY Eco–The AML software solution built for the Risk-based Approach

SURETY Eco, the end-to-end AML software ecosystem, facilitates every aspect of a true Risk-based Approach. With SURETY Eco, AML theory and your good intentions transform into a digital AML solution that adapts to your specific risk models, your specific books of business, and your specific risk appetite. AML Partners thrives on innovation in AML software solutions—innovations that deliver fully configurable software solutions that “Comply on the Fly” for your specific needs and AML program. To learn about SURETY Eco and its fully integrated CDD/KYC, transaction monitoring with optional 314a, and sanctions screening capabilities, call us today. We will show you how SURETY Eco adapts completely to your unique risk-based approach. SURETY Eco: The AML Software Ecosystem for end-to-end fully integrated AML/CFT Compliance.