HSBC fined £63.9m for AML failures
In December 2021, the UK financial regulator fined HSBC a charge of £64m and rebuked the bank for “serious weaknesses” in its AML controls over a period of eight years. In that time, HSBC has had a string of AML failures, including failing to properly consider the actions it took to detect the risk of suspicious activity and not testing and updating the systems designed to flag it.
Among the breaches highlighted by the FCA was an HSBC customer who combined his role as the director of a construction company with leading a criminal gang. The enterprise was involved in attempts to steal several million pounds by setting up fake companies. Even though the customer had set up an HSBC account with an expected annual income of £40,000, the bank failed to act when he received hundreds of thousands of pounds in additional income, including £120,000 in a single day in April 2010. Other breaches identified by the FCA were that HSBC had failed to “check the accuracy and completeness of data being fed into and contained within, monitoring systems” and “failure to identify indicators of money laundering or terrorist financing.”
What is AML and Compliance?
AML is as an acronym for the term Anti-Money Laundering. It is used in the financial, legal and compliance sectors to develop the regulatory controls that organisations and companies must carry out to avoid and report the potential suspicious behaviours that can occur when carrying out their activity. AML compliance monitoring focuses on the procedures that prevent potential violators from engaging in money laundering fraud or crime. If criminals partake in any form of money laundering, a business cannot partake in assisting the criminal from hiding the illegal transaction to make it appear legitmate.
The origin of the laundered money can be difficult to detect when it comes to online and remote services and products. In many instances, when services or products are purchased online, and this money has been laundered, the individual or a business on the other side of the transaction is unaware of the origin of the funds. If the processes are AML compliant with guidelines by the AML and Compliance procedures, then the risk is mitigated until they no longer exist. Practices and
requirements highlighted by the AML compliance regulations on Money Laundering prevention help businesses to avoid getting involved in possible fraudulent transactions through their services; it also improves, automates, and optimises their regulation processes.
Failure to undertake AML checks can leave a business and its staff open to prosecution as the only true defence to allowing a money launder through a business is that you applied necessary due diligence and unfortunately the fraudster made it through your systems.
“Regulations apply to a number of different business sectors, including accountants, financial service businesses, estate agents and solicitors.”
Who must Firms Register with for AML purposes?
Your business needs to be monitored by a supervisory authority if Money Laundering Regulations apply to your business type. The GOV website outlines the various business sectors that these regulations apply to. They state that the regulations apply to a number of different business sectors, including accountants, financial service businesses, estate agents and solicitors. HMRC is the supervisory authority for:
- Money service businesses not supervised by the Financial Conduct Authority (FCA)
- High-value dealers
- Trust or company service providers not supervised by the FCA or a professional body
- Accountancy service providers not supervised by a professional body
- Estate agency businesses
- Bill payment service providers not supervised by the FCA
- Telecommunications, digital and IT payment service providers not supervised by the
- Art market participants
- Letting agency businesses
All firms must register with HMRC if they carry out activities typically associated with these types of organisations by way of business and if you are not already registered.
A business must not trade without registering with HMRC under regulations. Trading without being registered is considered a criminal offence. By working with AML and Compliance, you can obtain insightful information about how to optimise your resources when it comes to AML regulations.
At AML and Compliance, we offer a full range of services focused on ensuring businesses
across all regulated sectors create, maintain and evidence their compliance with the
requirements of their regulators and legislation.
AML and Compliance work across a range of sectors, including:
- Insurance Agent and Brokers
- Estate Agents
- Financial Services
- Art and Antiques Dealers
How can working with AML and Compliance help me?
Our services allow businesses to focus on their AML and Regulator requirements through the implementation of effective policies, procedures, training, and consultancy. Having the appropriate policies and processes in place enables your business, its owners, compliance officers, staff, and clients to be protected under the Regulations.
AML and Compliance work with regulated businesses and companies to implement compliant structures to run as an undercurrent to their business to flow through the company in a complementary way as opposed to one that is restricted. We do this by providing a structured and detailed overview of the regulations required for a business to comply, and we apply all the relevant regulations to your business and make the relevant changes to your business.
“AML and Compliance work with regulated businesses and corporations to implement compliant structures to run as an undercurrent to their business to flow through the company in a complimentary way”
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