Mar, Jun 18th 2024
HSBC Private Bank (Suisse) has been banned by FINMA from entering new business relationships with politically exposed persons from Lebanon due to money laundering violations.
HSBC Private Bank (Suisse) has violated money laundering regulations concerning politically exposed persons (PEPs) from Lebanon, according to the Swiss Financial Market Supervisory Authority (FINMA). Consequently, FINMA has banned the bank from entering into new business relationships with PEPs until further notice.
The asset management subsidiary of British HSBC conducted two high-risk business relationships without adequately examining the origins and purposes of the assets, as announced by FINMA on Tuesday. These transactions involved CHF 300 million from a Lebanese state institution, transferred to Switzerland and often quickly moved to other accounts in Lebanon. These activities occurred between 2002 and 2015.
The funds likely originated from the Lebanese central bank. The former head of the bank, Riad Salameh, is accused of embezzling over $300 million, allegedly with the help of his brother Raja Salemeh. In 2020, the Swiss Attorney General’s Office opened an investigation against both brothers on serious money laundering suspicions.
FINMA states that HSBC Private Bank (Suisse) never clarified why a transitory account was used for these transactions and delayed reporting to the Money Laundering Reporting Office. The bank must now review all current business relationships with PEPs and high-risk clients to combat money laundering, under continuous onsite monitoring by an audit officer.
Until the investigator confirms the review’s conclusion, the bank cannot enter new business relationships with PEPs. Additionally, FINMA requires the bank to detail and assign responsibilities within its Board of Directors and Executive Board in writing.
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