Financial crime risk policies

HSBC is committed to high ethical standards. Our policies on anti-money laundering, sanctions, and anti-bribery and corruption aim to ensure that risks identified by the bank are appropriately mitigated.

HSBC (all wholly owned or controlled HSBC Group of companies) is committed to implementing single global standards shaped by the most effective anti-money laundering standards available in any location where HSBC operates.

HSBC has established a Global Anti-Money Laundering Programme (“AML Programme”) for this purpose. The objective of the AML Programme is to ensure that money laundering risks identified by HSBC are appropriately mitigated. This is achieved by establishing Board-approved, minimum governing policies, principles, and standards and implementing appropriate controls, to protect HSBC, its employees; shareholders and customers from money laundering. The AML Programme provides guidance to all HSBC employees, requiring them to conduct business in accordance with applicable AML laws, rules, and regulations.

The AML Programme is based upon various laws, regulations and regulatory guidance from the United Kingdom, the European Union, Hong Kong, the United States of America, and, as applicable, local jurisdictions in which HSBC does business.

The Programme includes but is not limited to:

  • The appointment of a Global and Country Money Laundering Reporting Officer (“MLRO”) or alternative position as required by local regulation
  • A Customer Due Diligence (“CDD”) Programme, which incorporates Customer Identification and Verification (“ID&V”) and Know Your Customer (“KYC”) principles, and the implementing of programmes designed to appropriately remediate CDD of our existing customers
  • Conducting enhanced due diligence (“EDD”) on customers assessed as higher risk, such as Politically Exposed Persons (“PEPs”) in senior positions, their relatives and close associates
  • Establishing processes and systems designed to monitor customer transactions for the purpose of identifying suspicious activity
  • The investigation and subsequent reporting of suspicious activity to the appropriate regulatory bodies
  • Mandated regular independent testing and regular AML training of its employees and contractors

  • The prohibition of the following products, services and customer types:
    • Anonymous accounts or numbered accounts or customers seeking to maintain an account in an obviously fictitious name
    • Shell banks, i.e. banks with no physical presence or staff
    • Hold Mail, i.e. where the customer has instructed all documentation related to the account are to be held on their behalf until collection
    • Payable-through-accounts, i.e. HSBC does not allow domestic or foreign bank customers to provide payable-through-accounts to their customers on their HSBC accounts; and
  • Any relevant additional local requirements.

HSBC is a member of the Wolfsberg Group, an association of thirteen global banks that aims to develop financial services industry standards for KYC, AML and Counter Terrorist Financing.

HSBC has prepared a Global Certification for use by any financial institution that believes it requires a USA Patriot Act Certification from an HSBC Group company.

Introduction

As a global financial institution, HSBC is committed to combatting financial crime and protecting the integrity of the global financial system. One of the ways in which we meet this objective is through HSBC’s Global Sanctions Policy (the “Policy”).

The Policy is derived from the sanctions resolutions, laws, regulations and regulatory guidance of the United Nations Security Council (“UN”), the United Kingdom (“UK”), the Hong Kong Special Administrative Region (“HK”), the European Union (“EU”) and the United States of America (“US”) and takes into account broader financial crime concerns. HSBC is required to comply with the applicable sanctions laws and regulations in all the jurisdictions in which we operate. Further, the Policy seeks, subject to the primacy of local law, to establish a globally consistent standard to effectively manage sanctions compliance risk across all HSBC wholly or majority-owned or controlled legal entities (“HSBC Group Entities”) in all jurisdictions in which HSBC operates. For this reason, we may not be able to support certain business activity even if it is permitted under local laws and regulations.

Minimum Standards

The Policy defines the minimum standards which all HSBC Group Entities must comply with, including:

  • Prohibiting or restricting customer relationships or transactions/business activity, involving:
    • parties named on certain sanctions lists issued by the UN, UK, HK, EU or US;
    • parties named on a sanctions list issued by the competent authority in the jurisdiction in which a HSBC Group Entity operates; and
    • any entity owned directly or indirectly 50% or more (individually or in the aggregate) or controlled by any of the parties described above, even if the entity is not named on a sanctions list.
  • Prohibiting customer relationships, or engaging in transactions or business activity, involving certain countries, territories or Governments1, including:
    • Iran and the Government of Iran;
    • North Korea and the Government of North Korea;
    • Syria and the Government of Syria1;
    • The Crimea Region;
    • The Government of Venezuela; and
    • Cuba and the Government of Cuba – relationships and transactions are prohibited to the extent that they involve a US nexus (that is, the US financial system, US persons or US-origin goods).
  • Restricting certain transactions and business activity involving, directly or indirectly, certain countries, governments, individuals, entities or industry sectors, including:
    • Belarus – prohibiting the direct funding of the Government of Belarus;
    • Libya – freezing of assets of certain Libyan entities (and any subsidiaries owned 50% or more or controlled by these entities) held outside Libya as at September 2011;
  • Russia – engaging in transactions or business activity involving:
    • the Russian military, intelligence or defence or related materiel sector;
    • the primary market for bonds issued by, or lending funds to, the Russian Sovereign2 outside of Russia;
    • the provision of goods, technology and services in support of certain Russian energy projects; or
    • debt and equity of certain entities operating in the Russian financial, energy and defence sectors; and
  • Zimbabwe – prohibiting the direct funding of the Government of Zimbabwe.

HSBC may, in its sole discretion, agree to process certain transactions prohibited or restricted under the Policy that are authorised by a licence from an appropriate authority or are otherwise permitted under applicable laws and regulation, such as those which relate to humanitarian aid. These transactions will be considered on a case-by-case basis and must be submitted in advance to HSBC for consideration and approval.

HSBC may, in its sole discretion, also decide not to process transactions, provide products or services or otherwise engage in transactions or other activity even where permitted by applicable sanctions laws and regulations where these activities fall outside of HSBC’s risk appetite.

In complying with applicable sanctions laws or regulations or the Policy, the processing of customer transactions may be delayed while we conduct additional due diligence on the underlying transaction and/or the parties involved. HSBC will block/freeze or reject transactions that appear to violate sanctions laws or regulations or the Policy where required to do so under applicable sanctions laws or regulations or the Policy, or will return transactions where they fall outside HSBC’s risk appetite. Further, HSBC will comply with obligations to report sanctions violations to the relevant regulatory authority, including where a violation relates to any attempt by a customer to evade or circumvent sanctions laws and regulations.


1 “Government” is generally broadly defined and generally includes the state and government of the relevant jursisdiction; any political subdivision, agency, or instrumentality thereof, including the jurisdiction’s central bank; any person owned or controlled, directly or indirectly, by any of the foregoing; and any person who or that has acted or purported to act directly or indirectly for or on behalf of, any of the foregoing, including current and former government officials, employees and contractors.

2 The term “Russian Sovereign” means any ministry, agency, or sovereign fund of the Russian Federation, including the Central B ank of Russia, the National Wealth Fund and the Ministry of Finance of the Russian Federation.

HSBC Holdings plc and the wider HSBC Group (HSBC) are committed to high standards of ethical behaviour and have zero tolerance towards bribery and corruption. HSBC requires compliance with all anti-bribery and corruption laws in all markets and jurisdictions in which it operates. These laws include the UK Bribery Act, the US Foreign Corrupt Practices Act and the HK Prevention of Bribery Ordinance, as well as other similar laws and regulations in the countries where we operate.

HSBC’s Anti-Bribery and Corruption (AB&C) compliance programme and policies are overseen by the HSBC Holdings plc Board. The policy incorporates the results of regular risk assessments and emphasises that books and records must be fair, accurate, and kept in reasonable detail. HSBC requires all employees, including the Board of Directors and Associated Persons, to comply with the principles in the policy in the performance of their services for or on behalf of HSBC.

HSBC’s Global AB&C Programme includes the following statement of overarching key principles:

  • All activity:
    • Must be conducted without intent to bribe or corrupt;
    • Must be reasonable and transparent;
    • Must not be considered lavish or disproportionate to the professional relationship;
    • Must be appropriately documented with business rationale; and
    • Must be authorised at an appropriate level of seniority.

Furthermore, it is unethical, illegal, and contrary to HSBC principles and good corporate governance to bribe or corrupt others, including to:

  • Offer, promise, give or authorise others to give or agree with anyone else to offer, promise, give or authorise others to give, anything of value, directly or indirectly, to any party, or to influence any Public Official; or
  • Solicit or receive anything of value, directly or indirectly, from any party; or
  • Offer or provide a facilitation payment (exceptions may be permitted in limited circumstances where an employee’s health, safety and/or liberty is at risk);

in order to improperly obtain or retain business or otherwise gain an unfair advantage in business.

Based on the principles above, the AB&C Programme imposes requirements under four risk pillars:

Employee Risk: All HSBC entities and individuals are required by policy to have appropriate controls in place to manage risks and maintain records when offering or accepting gifts, entertainment, sponsorships, travel & accommodation or other advantage or when engaging in charitable giving, political expenditure or recruitment.

In connection with recruitment, it must be merit-based, fair, and in keeping with the stringent hiring standards applied by HSBC. Hiring, in paid or unpaid, temporary or permanent roles, must not be used to improperly influence third parties or to improperly obtain or retain business or an advantage in business.

Third Party Risk: All HSBC entities and individuals are required by Policy to ensure that appropriate due diligence and controls are applied to any third party they engage, to ensure that they comply with the letter and spirit of applicable anti-bribery legislation and regulation. When a third party performs services for or on behalf of HSBC, additional controls are applied to manage the enhanced risks from Associated Persons.

Strategic Risk: All HSBC entities and individuals are required by Policy to apply controls in order to protect against bribery and corruption risks, in areas such as strategic proprietary investments, acquisitions, disposals, joint ventures and the development of products & services.

Customer Risk: All HSBC entities and individuals are required by Policy to ensure that Bribery & Corruption risks identified from customer behaviour or the provision of products and services to Customers are effectively managed through the application of controls.

As part of the prevention, identification and remediation of AB&C issues, mandatory training is conducted throughout HSBC, in addition to targeted training tailored to the roles of the individuals.

HSBC carries out regular, risk assessments, monitoring and testing of its AB&C programme.

HSBC also maintains clear whistleblowing policies and processes, to ensure that individuals can confidentially report concerns, with no fear of retribution, confident that they will be investigated and remediated appropriately.

To view the statement on HSBC’s whistleblowing arrangements see the Environmental, Social and Governance (ESG) update published on the ESG and responsible business page.

HSBC is an active user of Know Your Customer (“KYC”) data exchange platform SWIFT KYC Registry (opens in new window) in support of a more intelligence-based approach to identifying and managing financial crime risks. Third-party banks or vendors seeking HSBC AML or KYC due diligence information, including the detailed Wolfsberg Correspondent Banking Due Diligence Questionnaire (CBDDQ), should use this service in the first instance to collect relevant data and documents. Only if the information sought is not available, please send an e-mail request directly to HSBC using the following e-mail address: hsbc.affiliates.kyc@hsbc.com.

As a supplement to the HSBC AML statement we also make available the Wolfsberg Financial Crime Compliance Questionnaire (FCCQ), which gives an overview of basic information about HSBC’s policies and processes relating to financial crime risk management.

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