Exclusive: HSBC still in regulators' crosshairs over money-laundering

The Angel of Independence is seen near a HSBC building in Mexico City, December 11, 2012.

Credit: Reuters/Edgard Garrido

(Reuters) - U.S. regulators continue to find weaknesses in the way HSBC Holdings tries to prevent money laundering, according to people familiar with the matter, even after the British bank was forced to pay nearly $2 billion in penalties and invested millions in increasing its compliance.

In December 2012, the bank paid to U.S. authorities what was then a record amount to resolve charges that it failed to stop hundreds of millions of dollars in drug money from flowing through the bank from Mexico, and promised at the time to fix the problems.

When announcing the settlement, HSBC Chief Executive Stuart Gulliver said: "The HSBC of today is a fundamentally different organization from the one that made those mistakes."

But examiners from the Office of the Comptroller of the Currency have continued to find problems, two people familiar with the matter said. They said that the regulator told the bank late last year it has not seen enough improvement in the bank's controls in its correspondent banking business, which processes transactions for financial institutions around the world, including HSBC units.

Sources declined to provide further detail about the nature of the weaknesses. The sources declined to be named because they were not authorized to speak publicly about the internal changes or the communication with regulators.

While none of the people suggested HSBC could face another regulatory or enforcement action at this point, the assessment by the authorities shows how difficult it is for the bank to resolve the issues.

Director of Financial Intelligence Unit promises to work with anti-money laundering journalists

The director of the Financial Intelligence Unit (FIU) has promise to work with the Network of Journalists against Money Laundering and Terrorism Financing – The Gambia, a national chapter of the sub-regional network. 

Mr Yahya Camara said his unit is ready to work with the network to see how best the right information on the scourges of the twin evils of Money Laundering and Financing Terrorism (ML and FT) reach the masses.  The FIU is established by an Act of the parliament and it is mandated to render services such combating  ML and FT in The Gambia.

(L - R) Mr Drammeh, Mr Jahateh and Mr Camara

Mr Camara was speaking to members of the network during a courtesy call to his office, located within the Central Bank of The Gambia in Banjul, on Wednesday. 

Speaking earlier, Lamin Jahateh, coordinator of the network, said the purpose of the visit is to formally introduce the network to the FIU, and to discuss areas that the FIU can collaborate with the network, as part of the network’s 2014 action plan.

The main objectives of the network include complementing the efforts of the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) in combating economic and financial crimes in the sub-region with a view to protect the national economies and financial systems from M L. 

The network has aims to also to build the capacity of journalists to report well on issues pertaining to money laundering and terrorism financing.

Mr Jahateh said this year; the network intends to organize a seminar to familiarise journalists with the Anti-Money Laundering and Counter Financing Terrorism Act of The Gambia. 

This is to help journalists to be au fait with the tools and knowledge needed to do a proper reporting and analysis of the twin crimes. 

He also told the FIU boss that the network intends to hold symposium on International Anti-Corruption Day, 9^th December.  The event will be staged to raise awareness on the menace of corruption as it is one of the sources where people derive illicit fund to launder or to finance criminals.

The network also has plans to prepare and publish an E-Newsletter that will contain quality reports and feature articles on ML and FT, as part of its efforts to disseminate information on the twin crimes.

Welcomed initiatives

Mr Camara, director of the FIU, said the initiatives of the network are welcome and that the FIU will see how best they can collaborate with the network.

‘African countries incapable of dealing with terrorism in isolation’

By Modou S. Joof 

 

Dr. Abdullahi Shehu has said “most African countries are incapable of dealing with the problems” associated with terrorism in isolation due to many challenges confronting them.

The Director General of the Inter-Governmental Action Group against Money Laundering in West Africa, GIABA, said on 13 May, 2013 that the impact of terrorist acts which are manifested in various dimensions is widespread.

In a paper addressing “Peace and Security in Africa: The Challenges of the Fight against Terrorism in the Context of Maintaining International Peace and Security“, he told the United Nations Security Council (UNSC), “that the patterns and locations of these terrorist acts depend on the ideology, intents and capability of the perpetrators”.

While most terrorist activities have been driven by extremist and political motivations, Dr. Shehu says: “We are yet to see perhaps a devastating pattern if terrorist groups are driven by a feeling of deprivation, hunger, poverty and unemployment, and that may be even more difficult to control in a country.”

Close ranks

Speaking at the UNSC Open Debate on Combating Terrorism in Africa in the Context of Peacekeeping and International Security in New York, the GIABA Director General called on national, regional and international actors to close ranks in order to effectively fight the menace of terrorism in Africa.

He noted that the factors exacerbating terrorism include: “Political corruption, weaknesses in the legal framework and institutional mechanisms for the prevention of terrorists acts, inadequate skills and manpower for effective law enforcement, insufficient resources yet competing priorities, and inadequate inter-agency cooperation within countries and internationally.”

“Any strategic approach to the prevention and control of terrorism must also address the financing aspects of terrorism,” he said.

Gambia university student wins anti-money laundry speech competition in Ghana

Gabriel Bangura, a second year law student at the University of The Gambia (UTG), has emerged second at a recently concluded speech competition held in Ghana, organised by the Inter-governmental Action Group against Money Laundering in West Africa (GIABA).  

The competition attracted participants from four other universities in Ghana, Nigeria, Sierra Leone and Liberia. 

It was centred on topics such as: the impact of anti-money laundry and terrorist financing in West African economies and the role of the youth in fighting terrorism, and what inter-governmental organisations can do to prevent money laundry. 

The competition was won by Nigeria followed by The Gambia.

New Leadership in GIABA

The ECOWAS Council of Ministers in Abidjan on 23^rd January 2014, at its Extraordinary Meeting approved the appointment of Messrs. Adama Coulibaly and Brian Anku Sapati, as the Director General and Deputy Director General, respectively, of the Intergovernmental Action Group against Money Laundering in West Africa (GIABA). The new leadership is taking over from Dr. Abdullahi SHEHU, a Nigerian who has been Director General since 26^th May 2006 and his Deputy, Dr. (Mrs) Ndeye Elisabeth Diaw, a Senegalese.

Mr. Adama Coulibaly, an Ivorian, is bringing to GIABA over thirty-two years of diverse experience. Until his new appointment, the new Director General was the President of the Financial Intelligence Unit of Cote d’Ivoire (CENTIF-CI) and GIABA National Correspondent for Cote d’Ivoire from July 2011. Mr. Coulibaly presided over the GIABA 18^th, 19^th and 20^th Technical Commission/Plenary meetings held between November 2012 and November 2013. The new Director General was Director General of the National Federation of Industries and Services in Cote d’Ivoire (FNISCI) from 2005 to 2011. Between 1982 and 1999, he worked at the Cote d’Ivoire Customs Department where he rose to the position of the Director General on 8^th November 1996. Under his leadership from 1996 to 1999, the Customs Department broke all revenue collection records, improved performance and secured revenue that was consistent with the requirements of the Bretton Woods Institutions.

Press Release: GIABA trains West African accountants on AML/CFT requirements in Banjul

The Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) will organize a regional training on anti-money laundering and counter-financing of terrorism (AML/CFT) requirements for accountants from the five English-speaking countries in West Africa. The workshop will hold from 11 to 12 September, 2013 in Banjul, The Gambia.

The Financial Action Task Force (FATF) revised standards place obligations on accounting professionals to adopt and implement anti-money laundering and combating the financing of terrorism (AML/CFT) measures, including  risk assessment and application of the Risk-Based Approach to AML/CFT implementation, Customer identification/Customer Due Diligence, record keeping  and  reporting of suspicious transactions.
The main objective of the programme is to enhance the capacity of accountants on the revised FATF Recommendations to enable them fulfill their obligations.

In 2012, the GIABA Secretariat held a sensitization programme in Dakar, Senegal, for Accountants from Francophone member States. The initiative was a first step in sensitizing Accountants and Auditors on their roles in strengthening their countries’ AML/CFT regimes. A major resolution at that programme was that GIABA should sustain efforts to create awareness among the Association of Accountants and urge member States to direct professional bodies to create self-regulatory bodies within relevant sectors to further drive AML/CFT compliance. The current programme is therefore, designed for Accountants from the Anglophone member States and is part of GIABA’s commitment to sensitize and support accountants from benefiting member States to effectively implement robust AML/CFT measures.

GIABA calls for re-examining of laws against money laundering, financing terrorism in W/Africa

By Lamin Jahateh

There is a need to re-examine the anti-money laundering and counter-financing of terrorism (AML/CFT) measures in West African countries to ensure they do not induce superficial compliance by countries, said the director general of the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA), Dr Abdullahi Shehu.

Dr Shehu observed that the current AML/CFT framework may force money launderers and extremist groups to make frequent tactical changes and thus produces more grievances or fertile grounds for the recruitment of new set of criminals. 

Most parts of the AML/CFT framework of countries in the sub-region are products of imperfect and incomplete information, hence the need to establish and address the root causes of terrorism to ensure the successes recorded by the AML/CFT framework are enduring, Dr Shehu said while presenting a paper on the challenges of implementing  counter-financing of terrorism regimes in West Africa at the training workshop on AML/CFT for North and West African states organised by the Swiss Confederation and the Federal Republic of Nigeria in collaboration with Giaba held in Abuja, Nigeria, from December 11 to 13, 2012.  

“The benefits of implementing effective AML/CFT regimes are enormous,” the Giaba DG said. “Giaba will continue to support its members to implement effective AML/CFT measures that facilitate optimal deployment of resources and proper sequencing of intervention activities.”

For him, the adoption of international AML/CFT standards is not the magic wand towards eradicating money laundering and financing terrorism, but they are milestones towards building enabling framework that would provide the roadmap for achieving the ultimate goal of a crime-free society.

He said Giaba, an arm of ECOWAS established to fight money laundering and terrorist financing in West Africa, is mandated to develop strategies and mechanisms for the prevention and control of the twin crimes in the sub-region.