HSBC’s India staff has come under the scanner for deficiencies in performing the role of “offshore reviewers” of the global banking giant’s compliance with the safety mechanism against money-laundering and terrorist financing.
A probe by the US Senate’s permanent sub-committee on investigations found HSBC’s anti-money-laundering (AML) compliance department, which included employees in India, was staffed inadequately. Besides, deficiencies were found in the quality of the work done by HSBC’s “offshore reviewers in India” used for clearing a major backlog of suspected transaction alerts at the bank.
More than a third of the alerts already resolved by the Indian reviewers and others “had to be redone” after an independent assessment by the OCC (the US Office of the Comptroller of the Currency, which is the bank’s primary federal regulator in the country). The probe further found that an OCC visit to India in 2007 had revealed “weak monitoring procedures” in the bank’s internal control systems.
At a hearing before the Senate sub-committee on the matter in Washington yesterday, HSBC apologised for its mistakes and gave its “absolute commitment” to fix the problems.
When contacted, HSBC India declined to comment specifically on its operations. According to an HSBC Group statement on testimony before the US Senate’s permanent sub-committee on investigations, the bank said it took compliance with the law very seriously and acknowledged that, in the past, the bank had sometimes failed to meet the standards that regulators and customers expected. “We 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 sub-committee on this case history and also working with US regulatory authorities, and recognise that our controls could and should have been stronger and more effective in order to spot and deal with unacceptable behaviour”.