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HSBC is the second bank this week to be handed down a fine by the FCA for failings in its anti-money-laundering (AML) processes, being hit with a £63,946,800 penalty.

A news update from the UK’s watchdog explains that the bank used automated processes to monitor hundreds of millions of transactions a month to identify possible financial crime. However, the FCA found that three key parts of HSBC’s transaction monitoring systems showed serious weaknesses over a period of eight years from 31 March 2010 to 31 March 2018.

On the fine, Mark Steward, executive director of enforcement and market oversight at the FCA, said: “HSBC’s transaction monitoring systems were not effective for a prolonged period despite the issue being highlighted on numerous occasions. These failings are unacceptable and exposed the bank and community to avoidable risks, especially as the remediation took such a long time. HSBC continued their remediation to address these weaknesses after the relevant period.”

Specifically, HSBC failed to:

consider whether the scenarios used to identify indicators of money laundering or terrorist financing covered relevant risks until 2014 and carry out timely risk assessments for new scenarios after 2016;
appropriately test and update the parameters within the systems that were used to determine whether a transaction was indicative of potentially suspicious activity;
check the accuracy and completeness of the data being fed into, and contained within, monitoring systems.
Earlier this week, NatWest was also fined £264.8 million for AML failures. The bank failed to properly monitor the activity of a commercial customer between 8 November 2012 to 23 June 2016, who deposited about £365 million, of which £264 million was in cash. The bank also accepted large deposits of cash brought into various bank branches in bin-liners - on one occasion a bag packed with £700,000 burst its bin-liner and the money had to be repacked in hessian bags.

This also follows news that that 2020 saw record fines issued across the globe as regulators cracked down on financial crime and AML enforcement.

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