Another Day…. Another Scandal

From the scandal that broke out at the Commonwealth Bank of Australia to the scandal at Westpac, one would have thought lessons would have been learnt quickly. Ostensibly, not.

HSBC have reported themselves to AUSTRAC (Australia’s financial regulator) for potential breaches of anti-money laundering and counter-terrorism financing regulations. The lender’s Australian subsidiary reported itself to AUSTRAC as they may have under-reported transactions it made with foreign banks and other institutions.

The subsidiary of HSBC raised this concern through the annual report with a note saying ‘Regulators and other bodies may make findings that the bank has engaged in misconduct, including breaches of law or conduct that falls below community standards and expectations’. HSBC have decided against revealing the specific number of breaches; however, it is assumed that this number is significantly lower than that of Commercial Bank of Australia and Westpac.

As the Australian Government have intensified their efforts in tackling money laundering this will undoubtedly lead to a significant fine or settlement for HSBC.

This is not the first time the British lender has found itself in troubled water. In 2012 they were fined $1.9 billion in the U.S. for allowing themselves to launder drug money flowing out of Mexico which amounted to $881 million. Only last year HSBC agreed to a €300million settlement to the Belgium authorities for what was described as the prosecutor as “serious and organized tax fraud, forgery and falsification of records, money-laundering and illegal use of financial intermediaries.” Within its Swiss private bank subsidiary.

Although HSBC have previously stipulated that they increased spending on regulatory programs and compliance as well as hiring an additional 1,800 staff for its compliance operations, there seems to be a clear a gap between what needs to be completed and what is being carried out.


By Abdullah Ashur, Junior Consultant at Lysis Group