In a bold move, the Swiss Financial Market Supervisory Authority (FINMA) has concluded its enforcement proceedings against Geneva-based private bank Banque Audi (Bank Audi), owned by a prominent Lebanese banking group. During an on-site inspection in 2021, FINMA discovered serious shortcomings in the prevention of money laundering and ordered the disgorgement of profits totaling CHF 3.9 million and a capital surcharge of CHF 19 million.
This action follows worldwide criminal proceedings against the former head of Lebanon’s central bank, Riad Salameh, for embezzlement.
FINMA’s investigation determined that Banque Audi seriously breached supervisory law, leading to the confiscation of profits amounting to CHF 3.9 million ($4.2 million) linked to these violations. Furthermore, the bank is mandated to maintain additional own funds of CHF 19 million to bolster its financial integrity. The Swiss regulator does not have the statutory power to issue fines, but it banned Banque Audi from entering into new relationships with “politically exposed persons” or other high-risk corporate clients for the next two years.
This enforcement action is part of the broader “Lebanon context,” referring to the scandal involving Salameh and his brother. They are accused of funneling over $300 million from the Lebanese central bank through a British Virgin Islands company between 2002 and 2015. The scandal implicated the Swiss banking system in laundering these funds, drawing FINMA’s attention to Banque Audi‘s operations.
Prosecutors in Beirut charged Salameh in 2022 with embezzling more than $330 million in public funds. He is also under criminal investigation in Switzerland and seven other jurisdictions, probing allegations of financial crimes. These include France and Germany, which have issued warrants for his arrest. He stepped down from his post last summer.
Investigations revealed that Banque Audi inadequately scrutinized the origins of assets from high-risk clients, including transactions involving politically exposed persons. Despite suspicions and public allegations regarding the legality of these assets, the bank failed to report these transactions to the authorities or conduct thorough investigations, breaching its legal obligations.
While FINMA has refrained from pursuing actions against the individual managers responsible, noting their current absence from the Swiss financial sector, the publication of these findings serves as a public censure, highlighting FINMA’s commitment to upholding the integrity of Switzerland’s financial marketplace.
