HSBC will close the accounts of some Syrian nationals in the Middle East and North Africa, the bank said on Thursday, after heavy compliance costs made it unprofitable to deal with them.
HSBC was fined $1.9 billion in December - the largest such punishment ever imposed on a bank - after a scathing report by U.S. lawmakers accused the bank of lax controls relating to cash coming from Mexican drug cartels and countries under U.S. sanctions including Syria.
The lender confirmed it would be closing accounts belonging to all Syrians in the MENA region who were not Advance or Premier class customers. Those accounts require a minimum monthly salary of 15,000 dirhams ($4,100) or the maintaining of 100,000 dirhams in the account at all times.
HSBC said in a statement the action was due to the need to apply “enhanced oversight on any customer with connections to sanctioned countries.”
“Where we are unable to maintain sufficiently detailed information about such a customer through a relationship managed account, we are having to discontinue that relationship,” the bank said in a statement.
One regional banking analyst said the cost of making additional checks on customers was difficult to justify if they did not provide much revenue to the bank.
“HSBC’s strategy in the Middle East has always been to target the bigger clients who come with other cross-selling opportunities so it makes sense and also reduces costs,” the analyst said on condition of anonymity due to the sensitivity of the subject.
HSBC did not say how many people were affected by the decision. It said the bank had given the customers 30 days’ notice before the accounts are closed.