SWITZERLAND: HSBC’s Swiss private banking arm breached money-laundering rules, regulator finds

As published on: theguardian.com, Wednesday 19 June, 2024.

HSBC’s Swiss private banking arm breached money-laundering rules by failing to carry out adequate checks on the high-risk accounts of two politically exposed individuals, Switzerland’s banking regulator has found.

HSBC Private Bank (Suisse) has been banned from taking on any new high-risk customers until it has completed a full review of its business relationships, Switzerland’s Financial Market Supervisory Authority (Finma) said.

The watchdog found that the bank had operated two high-risk business relationships where it had failed to carry out an adequate check of either the origins, purpose or background of the assets involved.

A number of high-risk transactions were insufficiently clarified and documented, making it impossible to establish their legitimate nature. They were carried out between 2002 and 2015 and totalled more than $300m (£236m, €279m). The funds, which originated from a government institution, were transferred from Lebanon to Switzerland and, usually after a short time, flowed back to other accounts in Lebanon.

HSBC said it would appeal against the decision. It said: “We acknowledge the matters raised by Finma, which are historic. HSBC takes its anti-money-laundering obligations very seriously including complying with all laws and regulations in every market we operate in. As we plan to appeal the decision it would be inappropriate to comment further.”

Finma, which opened enforcement proceedings against HSBC in December 2021, said it had “breached its obligations in the prevention of money laundering in connection with two politically exposed persons and thereby seriously violated financial market law”.

The regulator said that until the measures had been implemented in full, the bank may not enter into any new business relationships with politically exposed persons. It added that the bank had cooperated with Finma.

The watchdog has ordered the bank to review all its high-risk business relationships and business relationships with politically exposed persons. It must also check the correct categorisation of the risks presented by other customers. An audit agent will monitor the implementation of these measures on site, and report to Finma.


Switzerland Money laundering AML Regulation Banking

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