Per a Bloomberg report, HSBC Holdings plc HSBC is said to employ 175 people for the financial-crime compliance team at its U.K. consumer bank, which is soon going to be split per the U.K. government’s plans for the “ring-fencing" of retail and wholesale banking activities by 2019.The compliance team will be joined by 25 employees transferred from other HSBC offices. With the team based in Edinburgh, where the bank recently opened a third office, their main aim will be to focus on anti-money laundering and sanctions compliance at the ring-fenced unit.HSBC has been under the regulatory radar for its failure to prevent hundreds of millions of dollars in drug money flowing through the bank from Mexico. The investigation had revealed substantial lapses in the bank's anti-money laundering compliance, which resulted in the worldwide displacement of funds from riskier nations through the bank.Along with the $1.9 billion settlement of the U.S. Department of Justice charges, HSBC agreed to a five-year deferred prosecution agreement and monitoring by court-appointed monitor, Michael Cherkasky. Under the terms of the agreement, any repeat wrongdoing or a failure to sufficiently upgrade internal controls will likely lead to the firm losing its U.S. banking license.According to HSBC’s Chief Executive Officer Stuart Gulliver, the bank incurred $2.9 billion in its efforts to identify financial crimes last year. Further, around 10% of the bank’s 255,000 full-time staff currently works in risk and compliance.Though the bank has made significant progress in improving its anti-money laundering and sanctions violations controls, the compliance controls were termed inadequate in an annual review compiled by Michael Cherkasky.According to Cherkasky’s summary, the bank’s compliance technology remains “an area of material weakness,” which leads to deficiencies in data needed to help detect high-risk transactions.Ring-fencing will give rise to various complications and troubles for the European banks, particularly those with globally diversified operations like HSBC and Barclays PLC BCS.HSBC’s ring-fenced bank will be known as “HSBC U.K.” and will be shifted to Birmingham, England, transferring 1,000 people from London. Nigel Hinshelwood, who joined HSBC in 2005, will oversee the creation of HSBC's ring-fenced bank.Similar to the ringfencing law, various other regulations have propped up in the U.K. since the financial crisis, which require banks to maintain higher capital buffers. This pressure has forced banks to curtail their risky investment banking operations, and focus on private banking and wealth management businesses that need relatively less financial resources and also have stable earnings.Banks like Deutsche Bank AG DB and Credit Suisse Group AG CS have also been reviewing their investment banking operations, with plans to scale down the business.Currently, HSBC holds a Zacks Rank #4 (Sell).Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CREDIT SUISSE (CS): Free Stock Analysis Report BARCLAY PLC-ADR (BCS): Free Stock Analysis Report DEUTSCHE BK AG (DB): Free Stock Analysis Report HSBC HOLDINGS (HSBC): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research