HSBC has been fined $537,683 in Hong Kong for information disclosure failures, a penalty resulting from a joint investigation by local regulators.
Fine for Disclosure Failures
According to a joint investigation by the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority, the bank did not properly disclose its investment banking ties with companies listed in Hong Kong in over 4,200 research reports issued between 2013 and 2021.
This case began as a self-report by HSBC and led to a joint probe by the two regulators. Investigators noted that the shortcomings stemmed from weak mapping and data reporting across HSBC’s systems, resulting in required disclosures not appearing when research was published. However, regulators stated they found no evidence that clients incurred losses due to missing warnings.
Client Reduction in Swiss Unit
HSBC's Swiss unit has begun removing over 1,000 wealthy clients from the Middle East, including from countries such as Qatar, Saudi Arabia, Egypt, and Lebanon. Reports indicate that clients with assets exceeding $100 million have been informed they will no longer receive services, with letters suggesting account transfers expected to be sent soon.
Ongoing Scrutiny
HSBC is still under scrutiny from Switzerland’s financial regulator, Finma, regarding its handling of high-risk customers. Last year, HSBC’s Swiss unit was prohibited from onboarding public figures due to previous clients being found in breaches of money laundering laws. The regulator concluded that the bank had not performed adequate due diligence on several transactions totaling $300 million between Switzerland and Lebanon, failing to recognize money laundering indicators.
HSBC faces significant challenges, including fines for disclosure failures and regulatory actions. These events highlight the importance of compliance with transparency standards in the financial sector.
