An outside review this month found that HSBC Holdings Plc and its subsidiary HSBC USA Inc. have made "significant progress" improving their anti-money laundering and compliance programs since reaching a $1.92 billion settlement with U.S. authorities in 2012, though it also found several areas where the companies need to improve.
The consultant found that in 2017, HSBC "made significant progress in developing a reasonably effective and sustainable AML and sanctions compliance program and expressed confidence that HSBC Group can achieve its target end state" within the next 18 months if it keeps up its current efforts.
The annual review, which stems from a deferred prosecution agreement HSBC reached with the U.S. Department of Justice in December 2012, still found, however, deficiencies in some of HSBC's controls and "highlighted potential instances of financial crime" and areas where the outside consultant thinks HSBC "is not adequately managing financial crime risk," according to HSBC's most recent 10-K report filed with the Securities and Exchange Commission.
The five-year agreement with DOJ expired in December 2017 and resulted in a dismissal of the deferred charges, according to the report. But the outside compliance consultant is staying on "for a period of time" at the discretion of the Federal Reserve Board and the U.K. Financial Conduct Authority.
The 10-K report says the DOJ is also reviewing how HSBC handled a corporate customer's accounts. HSBC is also cooperating with investigations from the Financial Crimes Enforcement Network and the U.S. Attorney's Office for the Southern District of New York over the "collection and transmittal of third-party originator information in certain payments instructed over HSBC Group's proprietary payment systems."