GRC Professional - February 2015 Edition | Page 23
HSBC has admitted that a culture problem
existed at the bank, telling ICIJ, “We acknowledge
that the compliance culture and standards of due
diligence in HSBC’s Swiss private bank, as well as
the industry in general, were significantly lower
than they are today.”
The bank’s statement said they had, “Taken significant steps over the past several years to implement reforms and to exit clients who did not meet
strict new HSBC standards, including those where
we had concerns in relation to tax compliance.”
The bank added that it had refocussed this part
of its business. “As a result of this repositioning,
HSBC’s Swiss private bank has reduced its client
base by almost 70% since 2007.”
Global Financial Integrity (GFI), a Washingtonbased research and advocacy organisation, said the
Leaked HSBC documents highlight a culture of
corruption in the international banking system that
goes far beyond the world’s second biggest bank.
“While the leaks really do expose a culture of
corruption at HSBC, it seems almost unfair at this
point to single them out,” said GFI Policy Counsel,
Joshua Simmons. “From Credit Suisse, to UBS
and BNP Paribas, to Standard Chartered, it feels
like nearly every major bank is either under investigation or subject to settlements for engaging in
serious financial crimes.
Even HSBC acknowledged in 2012 that
it let US$200 trillion—roughly three times
global GDP—flow through its New York office
over a three-year period, without applying the
legally-required anti-money-laundering controls.
Nevertheless, not a single bank employee or executive has been prosecuted in any of these cases. Until
the US Department of Justice—and financial
regulators worldwide—begin holding individuals accountable for their actions, we’re going to
continue living in a financial Wild West.”
While the leaks
really do expose a culture
of corruption at
HSBC, it seems
almost unfair
at this point to
single them out.
What it means for GRC
While tax may not fall strictly in the risk and compliance area, it is worth appreciating that the landscape
is changing, and tax may be an emerging threat for
international businesses.
Being caught in a tax probe will do reputational
and financial damage, so it begs the question: should
the chief risk office be worried?
Given the political environment, it may be
prudent for the ris