After 10 years, HSBC no longer subject to AML enforcement charges

By Puja Sharma

HSBC is not the only big global bank to have been hit by penalties like this. In 2020, Goldman Sachs Group was fined $2.9 billion for its role in a corruption scandal. The penalties for failures in AML monitoring where banks don’t spot unlawful proceeds moving through their systems are getting increasingly heavier as the years go on.

Significant action has been taken by regulators over the past decade against institutions where AML Monitoring and processes have been poor. HSBC is one of those institutions that has been hit with enforcement – in particular by the US Federal Reserve. However, in September last year, the Fed terminated a decade-long enforcement action against HSBC, which was the result of the bank violating money laundering and sanction rules.

In 2012, when the enforcement action was implemented, the Fed accused HSBC of becoming the preferred financial institution for Mexican and Colombian drug cartels. The Department of Justice at the time described the actions of HSBC as “stunning failures of oversight” and the bank was ordered to pay fines that (at the time) were record figures, amounting to a total of $1.92 billion.

HSBC is not the only big global bank to have been hit by penalties like this. In 2020, Goldman Sachs Group was fined $2.9 billion for its role in a corruption scandal. The penalties for failures in AML monitoring where banks don’t spot unlawful proceeds moving through their systems are getting increasingly heavier as the years go on.

While the removal of the enforcement order for HSBC is good news for the global bank it doesn’t change how much continued focus on compliance is necessary. Despite the fact that HSBC is shrinking its presence in the North American market to focus on Asia, compliance is going to have to remain a key concern.

The mistakes and challenges of the past decade have affected many financial services businesses. Although the big names like HSBC have seen the most public repercussions, failures in AML Monitoring can affect any business. And the consequences can be proportionally as severe. That’s why it’s so important for organizations to have effective money laundering compliance infrastructure in place, which includes key functions such as AML Monitoring.

This is a need that Lucinity has sought to fulfill by creating a platform that makes it simple to achieve compliance. The software is specifically designed to be easy to implement and use across an organization. It features essential components necessary to protect against the threat of money laundering, including AML Monitoring as well as actor intelligence and the Lucinity SAR Manager.

A unique approach to the software design has meant incorporating the best of both human and artificial intelligence – for example, attributes such as contextualising and interpreting on the human side and crunching numbers and assessing probabilities from AI.

Lucinity was established in 2018 and has since grown into a global presence in AML compliance, providing key tools such as AML Monitoring to businesses worldwide. The team’s mission to Make Money Good underpins every effort to better support businesses in the ongoing challenges that financial crime represents.