On Tuesday 17 July, HSBC will appear before the United States Senate Permanent Subcommittee on Investigations about a case history of U.S. Vulnerabilities to Money Laundering and Terrorist Financing.
HSBC takes compliance with the law, wherever it operates, very seriously. We will acknowledge that, in the past, we have sometimes failed to meet the standards that regulators and customers expect.
We will apologise, acknowledge these mistakes, answer for our actions and give our absolute commitment to fixing what went wrong.
We have learned a great deal working with the Subcommittee on this case history and also working with U.S. regulatory authorities, and recognize that our controls could and should have been stronger and more effective in order to spot and deal with unacceptable behaviour.
We believe that this case history will provide important lessons for the whole industry in seeking to prevent illicit actors entering the global financial system.
With a new senior leadership team and a new strategy in place since last year, HSBC has already taken concrete steps to augment the framework to address these issues including significant changes to strengthen compliance, risk management and culture.
These steps include:
- Creation of a new global structure, which makes HSBC easier to manage and control with four global businesses and ten global functions, allowing a coordinated and consistent approach, including compliance and risk;
- Substantial increase in resources, doubling of global expenditure and significant strengthening of compliance as a control function;
- Adopting and enforcing a single standard globally determined by the highest regulatory standard we must apply anywhere. This includes:
- Maximising information sharing for risk management purposes across HSBC to the extent permitted by law;
- Applying a globally consistent approach to knowing your customer regulations;
- Requiring all HSBC affiliates to independently complete due diligence on other HSBC affiliates with which they have a correspondent banking relationship;
- Introducing a global risk filter which will standardize the way we do business in high risk countries; and
- Reinforcing a consistent global sanctions policy. Among other things, this will mean that we will be screening for all illicit actors designated by OFAC in all jurisdictions, in all currencies.
Successfully implementing these steps will make a significant difference to the overall integrity of the global financial system.
Success in detecting and preventing illicit actors' access to the global financial system calls for constant vigilance and HSBC will continue to work in close cooperation with all governments to achieve this. This is integral to the execution of HSBC's strategy and to our core values.
Stuart Levey, Chief Legal Officer HSBC Holdings Plc, written testimony for the PSI
Irene Dorner, President and CEO HSBC Bank USA, written testimony for the PSI