HSBC Lags Behind Anti-Money Laundering Controls Target

The US Justice Department has warned HSBC that "much work needs to be done" to adequately strengthen its anti-money laundering controls.

Independent monitors were appointed to the bank, after the group settled with authorities following weak controls which allowed Mexican drug money to flow through its system. According to the DoJ's latest regulatory report, the firm still has to make a lot more changes to make sure these issues do not happen again.

However, it added that "based on [the monitor's] initial review and subsequent conversations with the bank, the monitor believes that the leadership of HSBC Group is appropriately committed to addressing the bank's longstanding compliance deficiencies."

Following the scandal, HSBC agreed with US authorities to install two independent monitors, which included former New York prosecutor Michael Cherkasky.

The filing added that HSBC didn't "in earnest" begin correcting its weak controls until 2013 and that the bank still needs to better integrate its various IT and transaction monitoring systems.

In December 2012, HSBC was fined a record $1.9bn (£1.2bn, €1.4bn) by US prosecutors for failing to enforce rules designed to prevent the laundering of criminal cash.

The DoJ charged the bank with failing to maintain an effective programme against money laundering and conduct due diligence on certain accounts.

In documents filed in federal court in Brooklyn, it also charged the bank with violating sanctions laws by doing business with Iran, Libya, Sudan, Burma and Cuba.

HSBC admitted to a breakdown of controls and apologised for its conduct.

"We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again. The HSBC of today is a fundamentally different organisation from the one that made those mistakes," chief executive officer Stuart Gulliver said at the time.