Thank you, Mr. Chairman.
Good morning. My name is Scott Bartos, and I am the senior vice-president and chief compliance officer for HSBC Bank Canada. I'm the senior executive responsible for the oversight of HSBC Canada's regulatory and AML compliance program.
Just to give you some context about HSBC, we are a Canadian chartered bank operating under Canadian law and regulated by the Office of the Superintendent of Financial Institutions. Our bank is a member of the global HSBC group, and a subsidiary of HSBC Holdings PLC, U.K., one of the largest financial institutions in the world.
HSBC Canada is currently the seventh largest Canadian bank with over 140 branches across the country and roughly 6,000 employees. HSBC Canada is a significant Canadian taxpayer, having paid approximately $252 million in federal, provincial, income, and capital taxes in 2012 alone.
Since my last appearance before this committee in February 2011, events have occurred that have reinforced the need to further strengthen our efforts to combat tax evasion and all other financial crimes. The entire HSBC group, including HSBC Bank Canada, is committed to implementing industry leading controls and best practices for combatting financial crimes and tax evasion.
As a whole, the HSBC group invests approximately $500 million per year to ensure regulatory compliance and combat financial crimes. In addition, the HSBC group has taken a new approach in the industry, and they have appointed, or established, a financial systems vulnerabilities committee, which will be advised by subject-matter experts in money laundering, terrorist financing, organized crime, and tax evasion.
Our anti-financial crime strategy can be described as deter, detect, and disclose. To successfully execute this strategy, HSBC Canada has instituted the following controls and safeguards: to deter, we have instituted controls to ensure that we've verified the identities of our customers and that we understand the intended purpose of their banking relationship with us; to detect, we monitor account activity to identify transactions that do not match usual patterns, or stated customer purposes—any transactions that appear unusual are subject to further review or formal investigation by the compliance team; and to disclose, we file suspicious transaction reports, large cash transaction reports, and electronic fund transfer reports with FINTRAC, the federal government agency. To give you some idea of scale, in 2012 HSBC disclosed approximately 725 suspicious transaction reports, over 96,000 large cash transaction reports, and approximately 600,000 electronic fund transfer reports. In addition, we cooperate fully with Canadian legal authorities with respect to any formal investigations they initiate.
While we're confident that these measures will help deter, detect, and disclose financial crimes and tax evasion, we must always be vigilant. To quote our HSBC group chief executive, Stuart Gulliver, “There is no finish line when it comes to combatting financial crimes. Money launderers, tax evaders, terrorist financiers continuously implement new means of abusing financial institutions. Their efforts represent a threat to the integrity of the global financial system, and to national security. We must always be one step ahead of them. As a steward of the global financial system, we must play a full part in protecting it. In doing so, we will work side by side with governments and regulators.”
I would like to thank the committee for the opportunity to be here this morning, and to share our observations on this important topic. I would be happy to answer questions in due course.
Thank you.