The Hong Kong Monetary Authority ordered a local unit of India’s largest bank to pay a HK$7.5 million ($960,000) penalty for failing to carry out proper checks to prevent money laundering and terrorism financing.
In its first action since gaining new anti-money laundering powers in 2012, the HKMA said the Hong Kong branch of State Bank of India had failed to carry out customer due diligence before establishing business relationships with 28 corporate customers between April 2012 and November 2013.
The unit also failed to monitor its customers properly, and had inadequate procedures for determining whether account holders were so-called politically exposed persons, the HKMA said in a statement.
The Indian bank has taken steps to address the lapses, and has confirmed that no suspicious transactions took place, the HKMA said.
“SBI is working closely with the regulators on this and will ensure full-scale compliance in all geographies we operate in,” said Siddhartha Sengupta, the State Bank of India’s Mumbai-based head of international banking.
“The regulatory authority’s action is triggered by certain policy gaps in our operations,” Sengupta added in a telephone interview.
The HKMA was given powers in 2012 to supervise banks’ compliance with Hong Kong’s anti-money laundering law, introduced in the same year.
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