In a world where regulatory oversight is critical, the collapse of Banca Privada d’Andorra (BPA) and the major compliance failures at HSBC Bank reveal how weak controls can shake even large banking systems. This article examines both cases—outlines what went wrong, how each banking system responded, and key lessons for institutions and investors.

What happened at BPA?

In March 2015, the U.S. agency Financial Crimes Enforcement Network (FinCEN) named BPA a “foreign financial institution of primary money laundering concern”.

The findings included that: senior managers at BPA knowingly facilitated transactions for transnational criminal organisations; the bank processed hundreds of millions of dollars through U.S. correspondent accounts. 

Andorra’s regulator took control of BPA, and the bank’s Spanish subsidiary required protection from creditors.

This case exposed how a small banking system—Andorra’s—could become a conduit for global money-laundering flows. The collapse prompted reforms in the Andorran banking system and regulatory oversight. 

What went wrong at HSBC Bank?

HSBC Bank (as part of the HSBC Group) has been subject to multiple regulatory actions for compliance failures in its global banking system.

For example, the Financial Conduct Authority (FCA) in the UK fined HSBC £63.9 million in December 2021 for “serious weaknesses” in its anti-money laundering systems, noting that from March 2010 to March 2018 the bank failed to monitor large volumes of transactions properly.

More recently, in January 2024, the UK’s Prudential Regulation Authority (PRA) fined HSBC £57.4 million for failing to protect up to £112 billion of deposits due to inadequate systems and controls across its banking system.

These failures show that even major global banking systems with enormous scale are vulnerable to governance, compliance, and oversight breakdowns.

Comparing the Two Banking Systems

Both examples highlight that the quality of controls, governance, and culture matters more than size alone. A large banking system is not immune to failures; a small one can wreak outsized damage if oversight is flawed.

Key Lessons for Banking Systems

1. Robust AML and KYC systems are non-negotiable – BPA’s collapse was driven by weak anti-money laundering controls.
2. Deposit protection and resolution readiness must be taken seriously – HSBC’s deposit-protection failings show critical systemic risk.
3. Governance matters – Senior management accountability and a strong compliance culture are central.
4. Global correspondent banking links require heightened vigilance – Both banks’ problems spanned borders and systems.
5. Reforms follow failures – Andorra reworked its oversight; HSBC pledged improvements.

FAQs

Q: What triggered BPA’s downfall?
A: The FinCEN designation in 2015, citing facilitation of misuse by organised crime through BPA. 

Q: How large was the fine HSBC faced for deposit protection failings?
A: £57.4 million in January 2024 for failing to protect up to £112 billion of deposits. 

Q: Can even large global banks suffer from compliance breakdowns?
A: Yes – HSBC shows that size does not guarantee immunity from oversight or governance failures.

Q: Why do reforms matter after banking system failures?
A: They rebuild trust, enhance safety, and prevent systemic risk from spreading across national or global banking systems.

Final Thoughts

The story of BPA and HSBC Bank offers vivid evidence that banking systems—whether large or small—can be compromised by weak compliance, oversight & culture. For regulators, investors, and clients alike, the takeaway is clear: a strong banking system must combine scale and quality of controls, governance, and transparency.