Risk of money laundering in
the US: HSBC case study
Mohammed Ahmad Naheem
Seven Foundation, Zurich, Switzerland
Purpose – This paper uses a case study approach using the Permanent Sub Committee on
Investigations (PSI) report on HBUS to determine where gaps in anti-money laundering (AML)
regulation and compliance are within the banking sector.
Design/methodology/approach – The PSI highlighted ve areas of serious weakness and
fundamental aws in the HBUS AML risk assessment. This paper examines the governance response that
led to these weaknesses and applies a rationale decision-making theoretical framework to explain it.
Findings – The report found that corporate culture and attitude at the governance level were key
factors in the difculties that HBUS faced.
Research limitations/implications – This paper focuses on one case, albeit one of the largest
banks in the global banking sector. Although generalisations are limited, the report does highlight areas
to consider with all banks.
Practical implications – The implications that are identied are aimed at banks and auditing rms
that have to work alongside governance structure within banks. The role of internal audit is raised and
has future implications for how risk assessment is undertaken and how AML compliance frameworks
are devised and reported on.
Social implications – A stronger social corporate responsibility attitude is suggested that considers
the wider social impacts of supporting criminal transactions, even inadvertently, by inappropriate and
under-resourced AML risk-assessment frameworks.
Originality/value – The detailed analysis of one case that considers the governance response to AML
regulation is new in this paper, and the detailed recommendations for improving and developing
stronger AML risk-assessment frameworks apply to the banking, nancial services and auditing
Keywords Corporate social responsibility, Money laundering, AML risk assessment,
Audit internal and external, HBUS
Paper type Case study
Please note that this paper was composed and submitted for review to this journal in October 2014.
All the content was correct at that point of time (October 2014). The banking industry is constantly
evolving, and new material from academic research is also emerging. Further disclosures in 2015
have since highlighted similar discrepancies in HSBC benecial ownership in banks in Europe.
All these points need to be taken into consideration when reading this paper.
The author is a specialist researcher and practitioner in the elds of trade-based money
laundering and virtual currencies contracted to mayfair compliance (www.mayfaircompliance.
com). The author acknowledges being a recipient of a research grant awarded by Princess
part of Seven Foundation’s “2020 Banking Vision – building banks of the future” and he thanks
her for the continued support and motivation both to himself and other students who benet
through her generosity (www.sevenfoundation.ch). The author also thanks Professor Muhammad
`h (a leading economist of this era in the world today, based in Damascus) who has continued
to provide valuable input both through his teaching of the science of economics and for his
The current issue and full text archive of this journal is available on Emerald Insight at:
Journalof Money Laundering
Vol.19 No. 3, 2016
©Emerald Group Publishing Limited