HSBC Holdings Plc continues to struggle in its efforts to improve its anti-money laundering and sanctions violations controls, according to the latest annual review compiled by Michael Cherkasky, the bank's court-appointed monitor.
The bank — which paid a $1.9 billion fine and struck a deferred-prosecution agreement with the Justice Department in 2012 — has made "commendable progress" in improving its compliance program, but Cherkasky is still unable to certify the bank can detect violations, according to a Justice Department summary of the review, filed in federal court on Friday.
"The monitor believes that the bank continues to face significant challenges in implementing an AML and sanctions compliance program that effectively detects and prevents potential financial crime," prosecutors told U.S. District Judge Ann Donnelly in Brooklyn.
An HSBC spokesman didn't immediately respond to an e-mail and a phone call seeking comment.
Cherkasky's report, which was filed with the Justice Department in January, is the second full-year report card on HSBC's pledge to fix its compliance problems in a five-year period. In last year's report, Cherkasky warned that at the rate it was going, HSBC would not be able to complete its compliance overhaul within the five-year period.
The monitor found deficiencies in the bank's so-called "Know Your Client" procedures, according to the summary. Certain affiliates didn't collect necessary customer information upon opening accounts, the summary said.
