BY PAUL O’DONOGHUE, Senior Correspondent
HSBC has launched a new risk monitoring system across its UK operations, the bank has revealed.
Chief Risk and Compliance Officer Ralph Nash told the International Anti-Financial Crime Financial 2024 that the new approach is based on building up a more rounded risk profile of its customers.
“We don’t do alerts-based transaction monitoring [anymore],” he told the event.
“On a monthly basis, [we assign] probability scores, from 1 – 1,000, for our customers that they are posing a heightened level of financial crime.
He said risk scores assigned by the bank are now based on an “observed set of behavior, over time, in the context of other reference data”.
Nader said that alerts are normally triggered due to factors such as payments being made from a high-risk jurisdiction.
He said HSBC’s new system uses data to make a fuller “picture of client behavior” which is then assessed for any abnormalities.
According to Nader, the UK was the first major HSBC market to go live with this technology, to “17 million customers”.
“This is live technology that we’re using instead of conventional transactional monitoring,” he said, adding that it is being used with “the full knowledge and understanding” of the UK’s Financial Conduct Authority regulator.
“The million dollar question is – is it better? The answer is yes,” he said.
“We’re finding more risk, more quickly. We’re reporting more SARs and we’re making more proactive decisions.”
Last month, Bloomberg reported that the Bank of England’s Prudential Regulation Authority ordered HSBC to review how it monitors the data which is used in its risk management systems.
The move will involve the company bringing in an outside expert to examine its practices and produce an independent report for the authorities.
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