The UK lender is the latest financial institution to report possible breaches of money laundering legislation in Australia. This followed scandals at the Commonwealth Bank of Australia and Westpac, both of which resulted in the resignations of bank chief executives.
HSBC raised the issue of potential money laundering laws in a note to its Australian affiliate’s annual report, first published by Banking Day, an online newsletter.
The bank did not specify the number of potential legal offenses. A person familiar with the situation said that she was investigating thousands of financial transactions that she may not have reported to regulatory authorities, according to law.
Lenders face fines of up to A $ 21 million (£ 10.3 million) for each violation of the law, a regime which can result in heavy penalties such as a fine of $ 700 million inflicted on CBA by Austrac, the regulator of financial crimes in 2018.
HSBC Australia said in its annual report: “In December 2019, the bank raised with Austrac an issue regarding the underreporting of a limited category of cross-border transactions involving non-bank financial institutions and other financial institutions.”
“The Bank continues to work with Austrac in this area in accordance with our open and transparent approach with regulators,” he added. “These regulators and other agencies can conclude that the bank has engaged in misconduct, including breaking the law or behavior that does not meet community standards and expectations.”
HSBC declined to comment on the nature or volume of transactions related to the potential violations.
HSBC has encountered difficulties with global regulators over past money laundering offenses. In 2012, the bank was fined $ 1.9 billion by U.S. authorities for allowing its network to be used by Mexican drug cartels to launder $ 881 million.
Austrac said it does not comment on specific entities or any investigations it may conduct, nor provide comments on the anti-money laundering compliance of individual entities.
Australian regulators have stepped up their enforcement of anti-money laundering and terrorist financing legislation over the past three years.
In November, Austrac launched legal action against Westpac, alleging that the bank failed to report international transactions of funds valued at more than A $ 11 billion in a timely manner, as required by law. When it became apparent that some of these payments may have facilitated the exploitation of children by pedophiles, CEO Brian Hartzer was forced to resign.