HSBC monitor cites management resistance amidst progress

Senior managers at HSBC’s US global banking and markets unit obstructed a 2014 internal KYC review “in a manner that caused the final audit report to be more favourable to the business than it would otherwise have been,” the court-appointed monitor has found. In a summary of a 1,000-page report on the bank’s progress in overhauling its AML and sanctions compliance, following penalties of $1.9bn in 2012 for US sanctions and BSA/AML breaches, Michael Cherkasky says that “[I]nteractions with both internal audit and [compliance] were marked by combativeness, overblown complaints about factual inaccuracy, and a basic lack of co-operativeness.” On learning of the problems, HSBC executives responded by moving the regional head of the Americas and cutting the bonuses of some staff.