The Cayman Islands Monetary Authority said it is investigating whether the Cayman Islands branch of HSBC Mexico SA breached any local laws or regulations. The Subcommittee of Investigations of the US Senate released a report earlier this month accusing HSBC of major anti money laundering and compliance weaknesses, which allowed organised crime to launder criminal proceeds.
The Subcommittee specifically pointed to a large number of high risk transactions with insufficient anti-money laundering controls involving US dollar accounts held by Mexican residents at HSBC Mexico SA, a class B banking licence holder in the Cayman Islands. The Senate investigation concluded HSBC’s Mexican subsidiary, which operated the accounts in Cayman, did have in many cases incomplete or missing customer records for the Cayman accounts, leaving the accounts open for misuse by organised crime.
As the regulator of financial services institutions in the Cayman Islands, CIMA officials insist they take seriously the apparent breakdown of anti-money laundering procedures at the Cayman Islands branch. CIMA’s Managing Director Cindy Scotland said that apart from the investigations into the actions of the Cayman Islands branch, CIMA also would conduct a complete review of its regulatory framework including the home host relationship, meaning the relationship between the regulators of HSBC Mexico SA and CIMA. The Monetary Authority will also review the relevant sections of the Cayman Islands’ Money Laundering Regulations and The Guidance Notes on the Prevention and Detection of Money Laundering and Terrorist Financing in the Cayman Islands.
“CIMA has a long history and strong reputation of acting to ensure that the regulatory framework in the Cayman Islands is sound,” Mrs. Scotland said.
“We intend to continue, and moreover, enhance that reputation in light of the growing complexity and interconnectedness of the global financial services industry.”