HSBC - Still Naughty After All These Years; NAFCU Compliance Skills 101
Written by Shari R. Pogach, Regulatory Paralegal
The global British bank, HSBC Holdings PLC (HSBC), just can't seem to get out of its own way. In its recently released Annual Report and Accounts 2015 available here, the bank admitted that its court-appointed monitor is still not happy with HSBC's progress in ramping up its anti-money laundering and sanctions programs to meet United States Bank Secrecy Act requirements. Here is an excerpt from page 116:
In January 2016, the Monitor delivered his second annual follow-up review report based on various thematic and country reviews he had conducted over the course of 2015. In his report, the Monitor concluded that, in 2015, HSBC made progress in developing an effective and sustainable financial crime compliance programme. However, he expressed significant concerns about the pace of that progress, instances of potential financial crime and systems and controls deficiencies, whether HSBC is on track to meet its goal to the Monitor's satisfaction within the five-year period of the US DPA [deferred prosecution agreement] and, pending further review and discussion with HSBC, did not certify as to HSBC's implementation of and adherence to remedial measures specified in the US DPA.
(Emphasis added.)
The British press is also reporting that there may still be criminal activity at HSBC. Apparently an investigation is being called for to look into shady activity between the representatives of the Maldives government and former British Prime Minister Tony Blair's wife, Cherie Blair's law firm Omnia Strategy. As the law firm's bank, HSBC accepted a210,000 payment from a suspected conman and terrorist for the Maldives autocratic president, Abdulla Yameen. It has been suggested that the bank's anti-money laundering systems should have blocked this payment.
As I indicated in this prior blog post, under the terms of the U.S. deferred prosecution agreement, the Department of Justice has sole discretion to determine whether the bank has breached the agreement. Potential consequences could include more terms and conditions, an extension of the agreement or criminal prosecution. HSBC could also face restrictions on its ability to process U.S. dollar payments through the United States or lose its banking license in the U.S.
It will be interesting to see how this all plays out
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