What is the lesson from HSBC's latest transgression?

What is the best way to strengthen controls environment in your organisation? Many say that antidote is to set a ‘tone at the top’.

While it is definitely a key and necessary element, it will not cure your organisation. The example of HSBC is vivid.

Wall Street Journal says in today’s report: 

HSBC Holdings PLC is under yet another investigation for failures in its anti-money-laundering compliance program, several high-profile hires apparently haven't changed the bank's culture. HSBC's chief executive said, for his part, that the monitor "has raised certain concerns" but the bank has continued its progress on implementing reforms. "By the end of this year, we are on track to have our anti-money laundering and sanctions policy framework in place and to have introduced major compliance IT systems across the group,” he said.

What are the facts? Although HSBC has hired, among others, former top U.S. officials Stuart Levey and Jennifer Shasky Calvery, it didn’t altered the whole organisation and haven’t changed its track. The captain is key for the boat, however the crew really sails.

What is the lesson from HSBC's latest transgression?  It is not enough to change compliance culture at the hands of a monitor enforcing a legal settlement. It has to be done in a way that conveys substantive change, and not merely to fend off authorities.

Ross Delston, a Washington, D.C.-based independent anti-money-laundering expert says: "That's been the tendency of multinational banks of late: Wait out the monitor or the [timing] of the enforcement action, and then go back to what they were doing before."