AmazonScience/document-haystack

1Safeguarding the financial system2We have continued our efforts to combat 3financial crime and reduce its impact on our 4organisation, customers and the communities 5that we serve. Financial crime includes 6fraud, bribery and corruption, tax evasion, 7sanctions and export control violations, 8money laundering, terrorist financing and 9proliferation financing. 10We manage financial crime risk because it is 11the right thing to do to protect our customers, 12shareholders, staff, the communities in which 13we operate, as well as the integrity of the 14financial system on which we all rely. We have 15a financial crime risk management framework 16that is applicable across all global businesses 17and functions, and in all countries and 18territories in which we operate. The financial 19crime risk framework, which is overseen by 20the Board, is supported by our financial crime 21policy that is designed to enable adherence 22to applicable laws and regulations globally. 23Annual global mandatory training is provided 24to all colleagues, with additional targeted 25training tailored to certain individuals. 26We carry out regular risk assessments 27to identify where we need to respond to 28evolving financial crime threats, as well as 29to monitor and test our financial crime risk 30management programme.31We continue to invest in new technology, 32including through the deployment of a 33capability to monitor correspondent banking 34activity. We are also enhancing our fraud 35monitoring capability and our trade screening 36controls, and investing in the application of 37machine learning to improve the accuracy and 38timeliness of our detection capabilities. 39These new technologies should enhance our 40ability to respond effectively to unusual activity 41and be more granular in our risk assessments. 42This helps us to protect our customers, the 43organisation and the integrity of the global 44financial system against financial crime.45Our anti-bribery and corruption policy46Our global financial crime policy requires 47that all activity must be: conducted without 48intent to bribe or corrupt; reasonable and 49transparent; considered to not be lavish 50nor disproportionate to the professional 51relationship; appropriately documented 52with business rationale; and authorised at 53an appropriate level of seniority. There were 54no concluded legal cases regarding bribery 55or corruption brought against HSBC or its 56employees in 2023. Our global financial crime 57policy requires that we identify and mitigate 58the risk of our customers and third parties 59committing bribery or corruption. Among 60other controls, we use customer due diligence 61and transaction monitoring to identify and 62help mitigate the risk that our customers are 63involved in bribery or corruption. We perform 64anti-bribery and corruption risk assessments 65on third parties that expose us to this risk.66The scale of our work67Each month, on average, we monitor 68over 1.35 billion transactions for signs 69of financial crime. In 2023, we filed over 7096,000 suspicious activity reports to law 71enforcement and regulatory authorities 72where we identified potential financial 73crime. We perform daily screening 74of 125 million customer records for 75sanctions exposure. In 2022, we 76reported screened customer records as 77a monthly average, although screening 78was, and continues to be, performed on 79a daily basis.80Whistleblowing81We want colleagues and stakeholders to 82have confidence in speaking up when they 83observe unlawful or unethical behaviour. We 84offer a range of speak-up channels to listen to 85the concerns of individuals and have a zero 86tolerance policy for acts of retaliation. 87Listening through  88whistleblowing channels89Our global whistleblowing channel, 90HSBC Confidential, is one of our speak-up 91channels, which allows colleagues and other 92stakeholders to raise concerns confidentially 93and, if preferred, anonymously (subject to 94local laws). In most of our markets, HSBC 95Confidential concerns are raised through an 96independent third party, offering 24/7 hotlines 97and a web portal in multiple languages. We 98also provide and monitor an external email 99address for concerns about accounting, 100internal financial controls or auditing matters 101(accountingdisclosures@hsbc.com). 102Concerns are investigated proportionately 103and independently, with action taken where 104appropriate. This can include disciplinary 105action, such as dismissal and adjustments 106to variable pay and performance ratings, or 107operational actions including changes to 108policies and procedures.109We actively promote our full range of speak-110up channels to colleagues to help ensure 111their concerns are handled through the most 112effective route. In 2023, 4% fewer concerns 113were raised through HSBC Confidential 114compared with 2022. Of the concerns 115investigated through the HSBC Confidential 116channel in 2023, 81% related to individual 117behaviour and personal conduct, 14% to 118security and fraud risks, 4% to compliance 119risks and less than 1% to other categories.120The Group Audit Committee has oversight of 121the Group’s whistleblowing arrangements, 122and the Chair of the Group Audit Committee 123acts as HSBC’s Whistleblowers’ Champion 124with responsibility for ensuring and overseeing 125the integrity, independence and effectiveness 126of the Group’s policies and procedures. 127Regulatory Compliance sets the 128whistleblowing policy and procedures, and 129provides the Group Audit Committee with 130periodic updates on their effectiveness. 131Specialist teams and investigation functions 132own whistleblowing controls, with monitoring 133in place to determine control effectiveness. 134 For further details of the role of the Group Audit 135Committee in relation to whistleblowing, see 136page 270.137HSBC Confidential concerns raised  138in 2023: 1391,746140(2022: 1,817)141Substantiation rate of concerns 142investigated through HSBC  143Confidential in 2023:14441%145(2022: 41%)14698% 147Total percentage of permanent and non-148permanent employees who received financial 149crime training, including on anti-bribery and 150corruption.151Integrity, conduct and fairness15294 HSBC Holdings plc Annual Report and Accounts 2023153ESG review | Governance