Global banking giant HSBC has quietly outed itself to Australia’s financial crime agency for potential breaches of anti-money laundering laws by failing to report transfers to foreign banks and institutions.
The disclosure by HSBC’s Australian arm makes it the latest bank embroiled in money laundering scandals after Westpac was implicated in 23 million breaches last year and the Commonwealth Bank paid $700 million to settle 53,700 failures revealed by the ABC 2017.
Banks in breach of anti-money laundering regulations in Australia face fines of up to $21 million for each individual offence raising the potential for massive fines or settlements.
A spokesman for HSBC would not reveal a specific number of the potential breaches but it is understood the reporting failures are in the thousands, significantly lower than Westpac or the CBA.
A spokesperson for the Australian Transaction Reports and Analysis Centre (AUSTRAC) said the agency did not comment on specific investigations that were underway.
“AUSTRAC works with reporting entities to support them in improving their compliance with their obligations … to fight financial crime to protect the community,” the spokesperson said.
HSBC’s exposure to money laundering breaches — first revealed in the online newsletter Banking Day — are contained in the bank’s 2019 financial accounts that were published late last month.
“In December 2019, the bank raised with AUSTRAC one such matter relating to the under-reporting of a limited category of cross-border transactions involving non-bank financial institutions and other financial institutions,” HSBC reported.
“The bank is continuing to work with AUSTRAC in relation to this matter in line with our open and transparent approach to regulators.”
HSBC has launched an anti-money laundering program to fix holes in its record keeping and reporting of cross-border transactions.
Like Westpac and earlier the CBA, HSBC now faces the massive task of identifying every specific transaction potentially unreported to AUSTRAC and taking corrective action.
Westpac is continuing to negotiate with AUSTRAC on a legal settlement after the regulator revealed the bank had inadvertently allowed its payment platforms to be used by a child sex ring in South-East Asia.
HSBC was fined $US1.9 billion in 2012 after US regulators found the bank’s global network had been used by drug cartels to launder billions of dollars.
One of the world’s biggest banks, HSBC has 6,000 offices around the world and the wide reach exposes it to a range of threats including links to potential criminal elements such as money launderers.