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GLOSSARY OF TERMS
AML
- Anti- money laundering
CDD
- Customer due diligence
CSR
- Corporate social responsibility
FATF
- Financial Action Task Force
FCA
- Financial Conduct Authority (UK regulator)
HBUS
- HSBC Bank in the US
HBMX
- HSBC Bank in Mexico
ICIJ
- International consortium of investigative journalists
KYC
- Know your customer
PEP
- Politically exposed persons
SAR
- Suspicious activity report
TBML
- Trade-based money laundering
UN
- United Nations
UNODC
- United Nations Office on Drugs and Crime
INTRODUCTION
The recent data reportedly stolen from the HSBC Private bank in Switzerland (ICIJ, 2015) has sparked global interest in the banking sector once again. In particular, concerns have been raised from a number of countries including the United Kingdom and France, who are now investigating the data for breaches in AML compliance. They especially want to understand why the bank's clients were effectively encouraged to defraud government tax intake. HSBC has since claimed that although it was accountable for past control failures , its processes are now fundamentally changed (BBC, 2015b). This might well be true, but is 'fundamental change' good enough to ensure that scandals such as these do not occur again? This article looks at the AML compliance implications of the leaked Swiss data and offers a viewpoint discussion on the changes that HSBC will need to make if it is to effectively change its practice and ensure that international AML compliance is adhered to in the future.
MONEY LAUNDERING
Much of the media attention on the Swiss HSBC activities has been focused on the tax evasion cases. This has also been the main interest of many national governments as they have realised a way to secure more money in their national budget. However, HSBC were also supporting clients involved in a number of other financial crimes including money laundering and supporting illegal trade activities.
the New York-based diamond firm Lazare Kaplan International, a former business partner, alleges that Daleyot participated in a criminal conspiracy to defraud it of $135 million by laundering diamond proceeds, largely through his HSBC accounts. (Chittum, 2015)
As Chittum (2015) continues in his report, more than 2000 diamond dealers held accounts at the Swiss bank, many of them dealing in diamonds from...