Switzerland: HSBC violates money laundering rules (FINMA)

HSBC Private Bank (Switzerland) is accused of violating money laundering rules. The Federal Financial Market Supervisory Authority (FINMA) has ordered measures.

The Swiss subsidiary of the British banking group failed in its obligations to prevent money laundering regarding two politically exposed persons, FINMA wrote in a press release on Tuesday. Consequently, the financial policeman ordered measures against the wealth manager, prohibiting him in particular from opening new business relationships with this type of risky client.

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

HSBC Private Bank (Switzerland) maintained two business relationships involving increased risks for which it did not sufficiently verify the origin of the assets as well as their purpose and their economic background, it emerged from the investigation.

Many transactions considered to be at risk have also not been sufficiently clarified and documented. Carried out between 2002 and 2015, these operations represent a cumulative amount of $300 million. The assets, coming from a state institution, were transferred from Lebanon to Switzerland before being transferred again shortly after to other accounts in Lebanon.

The bank did not at any time clarify the reasons why a transit account held with it had been used for these transactions, writes FINMA. She also did not identify that the transfers mentioned presented indications of money laundering. And even when the risks led her to terminate these business relationships in 2016, she did not inform the Money Laundering Communication Office.

Citing a “serious violation” of the laws governing financial markets, FINMA ordered the bank to review all its current business relationships involving increased risks and with politically exposed persons. The establishment must also monitor the compliance of the risk categorization of its other clients.

An audit manager has been appointed to monitor 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) must also submit to FINMA a list with an exhaustive declaration of responsibilities within its board of directors and management.

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