SBI Hong Kong Branch Fined $1 mn for Breaching Money Laundering Laws

In a setback to State Bank of India (SBI), the Hong Kong Central Bank imposed a $1 million (HK$7.5 million) penalty for breaching the Hong Kong anti money-laundering and counter terrorism financing rules.

The fine, imposed on SBI’s Hong Kong branch, is a first for the Hong Kong Monetary Authority (HKMA), which has taken disciplinary action under Hong Kong’s Anti Money-Laundering Ordinance brought into force in 2012.
However, SBI in a statement said, the HKMA officials have not found any instances of suspicious transactions. Besides paying the fine, the bank must also submit an independent report to the HKMA, which is Hong Kong’s banking regulator, outlining the remedial action it will take to tackle these internal control failings, it said.

“It is important to note that neither the HKMA nor the external consultants found any instances of problem accounts or suspicious transactions during the period in question, or the years following,” SBI said adding, “We fully support the HKMA’s efforts to ensure high standards of due diligence and monitoring among Hong Kong’s financial institutions. As noted by the HKMA, we have undertaken very positive and intensive remediation work to address their findings, which refer to procedures and policies in place during 2012 and 2013.”

According to HKMA, SBI Hong Kong, between April 2012 and November 2013, had failed to perform a series of key anti-money-laundering checks, including doing due diligence on 28 corporate customers, monitoring existing business relationships and verifying whether its customers were politically exposed persons.

The HKMA has stepped up efforts to crack down on money laundering in recent years following fears raised by international regulators that the city’s controls were not strong enough.