HSBC fined for Money Laundering—Again

HSBC money launderingHSBC has again agreed to pay a lot of money for poor financial behavior.


Every now and again, the Hongkong and Shanghai Banking Corporation (HSBC) pops up in the news. Unfortunately, it usually has to do with some sort of tax crime, tax fraud, or a shady offshore tax problem. 


In this instance, it is money laundering and “weaknesses” shown by the bank over an eight-year review period between 2010 and 2018. 


If HSBC being fined for troubling financial activity rings a bell, that could be because HSBC paid a $1.9 billion fine (a record high at the time) for its annoying habit of laundering money for Mexican drug cartels and transferring cash around the globe for Saudi banks with known ties to terrorists. At the time, HSBC noted the problems were about compliance, not complicity. Fast forward just about ten years and here we are again.


As part of its penance for its earlier (and continuing) money laundering travails, HSBC put into place automated transaction monitoring tools. In its review, the Financial Conduct Authority (FCA) found failures in those processes which had the following deficits:

  • Failure to determine and identify appropriate risk scenarios and factors
  • Lack of appropriate testing and revision of parameters used to determine if a transaction was suspicious
  • Failure to review data obtained and used in monitoring systems


As noted by the Executive Director of Enforcement at the FCA, “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.”


Not terribly surprisingly, HSBC chose not to contest the findings of the FCA and was thus able to enjoy a 30 percent discount in the anticipated fine for its actions, leaving the institution with a final bill of $85.16 million for this round. Not offered were comparative figures on how much the entity made in fees and transactions over that eight-year period compared to the fine being levied.


Reuters reports HSBC notes in a statement, “We are pleased to resolve this matter, which relates to HSBC's legacy anti-money laundering systems and controls in the UK.” Looks like HSBC has tidily resolved its issues once again. 


Skilled tax defense attorneys provide strong representation when you face tax controversy

The tax group at Robert J. Fedor, Esq., LLC represents business and individual clients responding to tax litigation, IRS civil or criminal tax audits, or employment tax disputes. When experienced tax advice is needed locally or internationally, call 800-579-0997 or contact us for a free consultation. We have offices in Cleveland and Chicago.


Understanding Tax Fraud