HSBC ‘breached money laundering rules’, says Swiss regulator

The HSBC settlement brings an end to the French tax dispute. AP

HSBC Private Bank (Switzerland) is accused of violating money laundering regulations. The Swiss Financial Market Supervisory Authority (Finma) has ordered measures to be taken.

The Swiss subsidiary of the British banking group failed to comply with its money laundering prevention obligations in respect of two politically exposed persons, Finma wrote in a statement on Tuesday. As a result, the financial watchdog has ordered measures against the asset manager, including a ban on opening new business relationships with this type of high-risk client.

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This decision follows an enforcement procedure opened in December 2021, during which the bank cooperated, Finma said.

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The investigation revealed that HSBC Private Bank (Switzerland) had two high-risk business relationships for which it had not sufficiently verified the origin of the assets, their purpose or their economic background.

In addition, many transactions considered to be high-risk were not sufficiently clarified and documented. Carried out between 2002 and 2015, these transactions represent a cumulative amount of $300 million. The assets, originating from a state-owned institution, were transferred from Lebanon to Switzerland, before being transferred again shortly afterwards to other accounts in Lebanon.

At no time did the bank clarify why a transit account held with it had been used for these transactions, writes Finma. Nor did it identify any money laundering indicators in the transfers mentioned. And even when the risks led it to terminate these business relationships in 2016, it did not inform the Money Laundering Reporting Office.

Citing a “serious violation” of the laws governing financial markets, Finma ordered the bank to review all its current business relationships with increased risks and politically exposed persons. In addition, the bank will have to check that the risk categorisation of its other clients is compliant.

An audit manager has been appointed to oversee the implementation of these measures. In the meantime, the bank will not be able to open new business relationships with politically exposed persons.

HSBC Private Bank (Switzerland) will also be required to submit to Finma a list with a full declaration of responsibilities on its Board of Directors and Executive Board.

Translated from French by DeepL/mga

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