HSBC Mexico AML failings: a case study
| DOI | https://doi.org/10.1108/JMLC-03-2015-0008 |
| Published date | 03 May 2016 |
| Date | 03 May 2016 |
| Pages | 208-218 |
| Author | Patrick O’Sullivan |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
HSBC Mexico AML failings:
a case study
Patrick O’Sullivan
GRCTC, Cork, Ireland
Abstract
Purpose – This paper aims to provide a brief overview of the anti-money laundering (AML) failings
documented by the US Permanent Subcommittee on Investigations found in Hong Kong and Shanghai
Banking Corporation (HSBC) Mexico. This paper focuses in on the key areas of concern raised by the
2012 report in respect of HSBC Mexico (HBMX) such as failure to undertake correct customer due
diligence on high risk customers and repeated failings by senior management at HBMX to remedy these
problems.
Design/methodology/approach – The relevant parts of the Subcommittee report relating to HBMX
were examined along with the evidence submitted to the Subcommittee. From this examination, the author
then noted the key examples of AML failings at HBMX and then commented on these examples while also
referring to academic and regulatory guidance such as that from Financial Action Task Force.
Findings – Certain proposals are made throughout the paper, but these remain only suggestive. The
key point is that the failings evident in HBMX may very well arise in other institutions, and this paper
proposes how these failings may be resolved.
Research limitations/implications – Research for this paper remained limited to second-source
references such as the Subcommittee report and the listed Exhibits along with other academic
resources. The paper was also peer reviewed by a compliance ofcer. However, examining the paper
from a more practical viewpoint may have struck a better balance between an optimal and realistic level
of compliance.
Practical implications – Adopting an analytic approach to the subject of AML controls should aid
those who work in compliance daily while also generating further commentary among both regulators
and senior management within nancial institutions.
Originality/value – The paper is the only one to date to focus on one geographical strand of the AML
failings at HSBC and then comment on this from an academic perspective.
Keywords AML, HSBC, Cayman islands, Customer due diligence, Suspicious transactions
Paper type Case study
1. Introduction
The Hong Kong and Shanghai Banking Corporation, (HSBC) is an international banking
conglomerate with subsidiaries across multiple jurisdictions. Unfortunately, the
pan-jurisdictional nature of banking can also easily be manipulated for the purposes of
money laundering. To thwart any efforts to launder money, banks adopt internal
practices and procedures to identify customers and to also detect any unusual activity
which may indicate possible money laundering. However, there is always a possibility
that a bank’s anti-money laundering (AML) controls fall short of the required standard.
For HSBC, these AML control failings were recounted by a US Senate Permanent
Subcommittee on Investigations report on US Vulnerabilities to Money Laundering,
GRCTC is an IDA and Enterprise Ireland funded research centre
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1368-5201.htm
JMLC
19,2
208
Journalof Money Laundering
Control
Vol.19 No. 2, 2016
pp.208-218
©Emerald Group Publishing Limited
1368-5201
DOI 10.1108/JMLC-03-2015-0008
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