HSBC Bank is defending the introduction of a multitude of new money-laundering regulations on the grounds that these are necessary to safeguard the “integrity” of the banking system. However, it is pledging to do its utmost to keep disruptions to its clients to a minimum.

The bank gave this reaction when asked by Voice of the Workers Weekly for its reaction to the remarks made by the Arbiter for Financial Services Reno Borg. The latter expressed concern that banks and regulatory watchdogs were burdening their clients with excessive red tape in a bid to enforce  money laundering regulations. In his 2020 annual report, the arbiter called for a solution “to lessen unnecessary bureaucracy” which he said was making life of customers difficult and potentially hindering investment in financial services thereby negatively affecting the economy.

This portal sought a reaction from HSBC Bank, Bank of Valletta and APS but by the time of writing only HSBC replied.

In his reaction a spokesman for HSBC said that the bank had a fundamental responsibility to help protect the integrity of the financial system.

“Knowing our customers better is key to protecting them from financial crime, so we make sure all the information we have about our customers is accurate, up to date and complete,” he remarked.

“These requirements are essential but we aim to keep any disruption to our customers at a minimum. Working together on this important matter helps keep criminals out of the financial system, benefitting the bank, our customers and society at large,” the spokesman added.

Sources in the banking sector who preferred to remain anonymous told Voice of the Workers Weekly that the government was to blame for not heeding the warnings which were being sounded in recent years by practitioners and reputable firms.  

“Unfortunately, we are now paying the price for government’s decision to flirt with shady regimes and dodgy companies while turning a blind eye to the conduct of certain high-ranking politicians within,” the source said.

“The recent decisions whereby Malta was grey listed by the Financial Action Task Force as well as the UK government had been looming long, but government naively believed it could still save the day with an eleventh hour effort to enact some reforms,” they added.  

In 2018, the then HSBC Bank Malta CEO Andrew Beane had called for efforts to safeguard Malta’s financial services reputation in the wake of the increasing scrutiny triggered by the Panama Papers scandal in 2016 and a series of corruption scandals. His call, made during the Annual General Meeting had been interpreted as yet another appeal to the government to safeguard the island’s reputation. The HSBC CEO had also called on the regulator to ensure a level playing field to ensure all banks were adhering to money laundering regulations. His appeal was made amid concerns that a rotten apple could bring down the entire sector with it.

A few months later, the European Central Bank ordered the revocation of the Pilatus Bank licence – a bank which had been described as a ‘laundromat’ for shady companies and corrupt foreign governments. Subsequently, another bank, Satabank Malta, also faced the same fate as its licence was withdrawn in the wake of a host of suspicious transactions involving millions.  

Unfortunately, many are once again paying the price for the misconduct of a selected few. Law-abiding citizens, NGOs, companies and everybody who is remotely considered as being politically exposed are the ones who will bear the brunt.