Hsbc Fraud

742 Words2 Pages

The past few years have been a turbulent time for the international bank causing unparalleled financial and reputational damage as a result of a number of events of severe divergence and fraud on the CSR framework at HSBC and the global standards that HSBC abide by. HSBC was a case study for the United States Senate Permanent Subcommittee on Investigations (PSI) looking at U.S. Vulnerabilities to Money Laundering and Terrorist financing. Described by chairman Douglas Flint as the toughest in HSBC’s history the PSI concluded that HSBC, and its U.S. affiliate, exposed the U.S. financial system to a “wide array of money laundering, drug trafficking, and terrorist financing risks due to poor anti-money laundering (AML) controls” (United States …show more content…

communities to dubious personnel, entities and activities from known high-risk locations. The investigation identified that in 2010 HSBC was cited by the federal regulator, the Office of the Comptroller of the Currency (OCC), for a number of severe AML deficiencies, including a failure to monitor $60 trillion in wire transfer and account activity, a backlog of 17,000 unreviewed account alerts regarding potentially suspicious activity, and a failure to conduct AML due diligence before opening accounts for HSBC affiliates (United States Senate 2012). The PSI also found that the OCC had failed to take a single enforcement action against the bank over the previous six years, despite strong evidence of AML problems (United States Senate …show more content…

Specifically, the events were a deviation from the Strategy, Community and Sustainability dimensions of the HSBC CSR framework. As outlined earlier in the report Strategy, Community and Sustainability form important dimensions of the CSR framework. The strategy dimension specifically articulates that the HSBC’s approach to doing business relies on four pillars that ensure it delivers value to customers, shareholders and the community. The four pillars are illustrated in Figure 1. The incidents including AML deficiencies, conducting business with high-risk affiliates, circumventing OFAC conditions and conducting business with terrorists are in breach of these pillars due to conducting business outside of the group’s risk appetite, failing in the application of values and furthermore putting the long-term sustainability of the business at

Open Document