Newspaper article The Journal (Newcastle, England)

HSBC Set for New Probe by Watchdog; FINANCE

Newspaper article The Journal (Newcastle, England)

HSBC Set for New Probe by Watchdog; FINANCE

Article excerpt

Byline: HOLLY WILLIAMS business@ncjmedia.co.uk

BANKING giant HSBC has revealed it is facing a UK investigation over money laundering controls as it posted a worse-thanexpected 62% profits slump.

The lender said the Financial Conduct Authority (FCA) launched a probe at the end of last year into HSBC's financial crime compliance, with the group remaining under pressure on both sides of the Atlantic after its PS1.2bn US money laundering fine nearly five years ago.

The announcement came as it said pre-tax profits tumbled to $7.1bn (PS5.7bn) last year amid "volatile" trading caused by the Brexit vote and President Donald Trump's election.

It blamed the profits dive on a string of one-off charges, such as the sale of its Brazilian operations, as well as hefty write-downs from a restructuring.

In its annual report published alongside the results, HSBC said the FCA was investigating the bank's "compliance with UK monetary laundering investigations and financial crime systems and control requirements".

It confirmed the FCA has launched an enforcement action against the group, which can result in potential fines, while it added US regulators also remain concerned over the bank's measures to improve anti-money laundering defences.

HSBC's shares dived by as much as 7% after its annual results, branded "disappointing" by City experts. It also sparked share falls for rivals as the figures - the first from the major UK players - raised fears of a worse-than-expected annual results season for the sector.

Chief executive Stuart Gulliver said he would "leave no stone unturned" as he looks to bring the bank's financial crime controls up to scratch.

But the annual report showed pay deals for top bosses were amended after concerns were raised into its progress on financial crime controls by the so-called monitor - posted to HSBC's offices as part of a deferred prosecution agreement following its 2012 fine. …

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