HSBC Bank Australia says it is continuing to cooperate with domestic anti-money laundering regulator AUSTRAC over its failure to report high value transactions involving offshore financial institutions and non-banks.
The bank revealed last year that it had launched an AML remediation program to fix holes in its record-keeping and reporting of cross-border transactions.
It is believed the breaching persisted for many years because HSBC was not using SWIFT's MT202 messaging format in line with AUSTRAC requirements.
This meant that details of potentially thousands of cross-border payments and instructions were never reported to the regulator.
HSBC discovered the longstanding deficiencies in its AML reporting in December 2019 and then notified AUSTRAC of the problems.
In its latest financial accounts posted on its parent company’s website, the directors of HSBC’s Australian arm indicated that AUSTRAC had not yet completed an assessment of the reported breaches.
“In December 2019, the bank raised with AUSTRAC one such matter relating to the underreporting of a limited category of cross-border transactions involving non-bank financial institutions and other financial institutions,” the board stated in the annual report.
“The bank is continuing to worth with AUSTRAC in relation to this matter in line with our open and transparent approach with regulators.”
HSBC’s local arm suffered a 33 per cent decline in net profit for the 12 months to the end of December after the declining rate environment hacked into the group’s interest revenue streams.
The bottom line was A$220 million - $110 million down on 2019.
While most of the fall was attributable to the slide in interest revenue outpacing the decline in interest expenses, the bank also suffered lower returns from its trading operations and fee-based activities.
HSBC grew its loan asset base by around $1 billion or 4 per cent to more than $30 billion during the year after widening its mortgage distribution capability through broker groups.
“Customer advances increased largely due to growth in the mortgage portfolio following a number of successful mortgage campaigns and expansion of the broker channel for mortgages,” the directors said in the report.
More than 2100 customers were still receiving Covid-related relief at the end of December.
In terms of customer numbers, most of the assistance packages related to credit card and personal loan accounts covering $12.9 million of lending.
There were 647 mortgage borrowers still receiving repayment relief at the end of the year who collectively owed HSBC $337 million.
HSBC continues to be one of the fastest-growing deposit takers in the Australian market
In 2020 it expanded its retail deposits by more than $4 billion or 13 per cent to $36.5 billion.
The bank also took advantage of the Reserve Bank’s Term Funding Facility, making total drawdowns of $739 million.
Directors did not disclose whether the business had more flexibility to draw on the facility.
Dividends paid to the parent last year more than halved to $79.6 million.
In 2019 the Australian arm paid a dividend of $162 million.