The headline reads, “HSBC Settles $1.9bn For Aiding Drug Lords, Terrorists And Rogue States.” This is the largest fine levied to date by the US department of justice. The investigation itself took more than a decade to complete, so looking at the way HSBC handles its anti-money laundering (AML) processes today is probably a world away from the way they handled them when these transactions occurred.
To give credit where due, the HSBC chief executive, Mr. Stuart Gulliver accepted responsibility for the mistakes of the past and expressed profound sorrow that they had occurred. Accepting accountability is a great way to effectuate change. This wasn’t lost on the Department of Justice either. As part of the Deferred Prosecution Agreement, the US DOJ wrote, “Management has made significant strides in improving ‘tone from the top’ and ensuring that a culture of compliance permeates the institution. The efforts of management have dramatically improved HSBC Bank USA’s and HSBC Group’s Bank Secrecy Act / Anti-Money Laundering and Office of Foreign Assets Control compliance programs.”
Good words: “Tone from the Top,” and “Culture of Compliance.”
These are words that permeate the audit world and show up in standards and professional guidance. Tone from the Top matters significantly and helps contribute towards a culture of compliance. That’s why initiatives such as continuous monitoring can affect significant changes in the way that an organization goes about its day-to-day business. When people know that someone (ie technology) is watching 24/7, they are less likely to ignore the rules and more likely to toe-the-line. Detection can lead to prevention, when it is applied continuously and effectively communicated across the organization.
The only thing that gives me pause about the whole story is what I read towards the end of the article. It stated that the head of group compliance resigned soon after the story broke, but that the chairman did not. Is that truly reflecting the tone at the top? Or, is it talking the talk, without walking the walk?
The headline article can be read here.