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Class action law suits are being brought against two banks in the US for alleged money laundering failings.

Author: Joshua L. Ray  13 October 2020

Posted in: Anti-Money Laundering.

Josh Ray of financial crime specialists Rahman Ravelli sees this as a reminder of the importance of compliance.

HSBC and Standard Chartered are facing class action law suits in the US following allegations that they failed to tackle money laundering.

The legal action comes in the wake of the huge leak of 2,100 suspicious activity reports (SARs) filed with the US Treasury Department's Financial Crimes Enforcement Network (FinCEN) between 2000 and 2017.

The leaked documents, which have become known as the FinCEN Files, are at the centre of allegations that the banks did little to prevent the movement of large amounts of money that were suspected of being the proceeds of crime.

The class actions are being prepared on behalf of investors in the two banks, who claim they lost money when the banks’ share prices fell as a result of the leak. HSBC's share price fell to its lowest level in 25 years when the documents were made public; falling 5.3%. On the same day, Standard Chartered shares fell by 5.8%.

HSBC has said that it has worked since 2012 on improving its ability to tackle financial crime in more than 60 countries. But these class action suits show how the financial cost of compliance failures can go far beyond just regulatory penalties.  By co-operating with authorities and admitting their guilt, banks like HSBC and Standard Chartered open themselves up to shareholder litigation; which can potentially cost tens of millions more in legal fees and settlements. 

This a situation that emphasises the importance of being proactive in tackling compliance issues. Such an approach can involve conducting periodic “stress tests” of policies and procedures to ensure they are fit for purpose. Such an approach is necessary if a company is to prevent any regulatory problems before they develop and spread, causing major, costly problems.

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Joshua L. Ray


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Joshua Ray represents individuals and corporates in complex investigations, prosecutions and regulatory actions regarding market manipulation and multijurisdictional matters involving fraud, bribery and money laundering.

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