No one doubts the need for banks to comply with international regulations, especially where money laundering is concerned. It prevents illegal gains from going to organised criminals and sovereign states from funding activities detrimental to their own citizens and neighbours. That is the aim of the recent EU and US sanctions against Syria, Iran and Sudan.
No one understands this better than HSBC, which was fined $1.92 billion (Dh7.06 billion) last December for allowing itself to be used to launder money out of Mexico and into Iran.
However, HSBC’s recent decision to close the accounts of those countries’ citizens under the banner of “internal risk assessments” — with the added caveat that the ban only applies to those with less than Dh100,000 or Dh350,000 depending on the account type — sends the wrong message. It implies that all of those countries’ citizens are part of a conspiracy to launder money.
More telling, though, is the banks’ decision to allow those with cash reserves to maintain their accounts, suggesting HSBC is willing to risk having citizens from those countries on their books, provided there is enough money to justify it.
While a number of other banks will not allow these nationalities to open new accounts, HSBC is the first to cancel existing ones. If HSBC wants to show it is serious about stopping money laundering, it should find a way to monitor all its accounts, not just those with enough assets to be financially lucrative.