Switzerland’s Financial Market Supervisory Authority (FINMA) announced that it found that HSBC’s Swiss private banking arm breached anti-money laundering regulations by failing to adequately vet the high-risk accounts of two politically exposed individuals (PEPs). According to FINMA, HSBC Private Bank (Suisse) neglected to conduct proper checks on the origins, purpose, or background of assets involved in two high-risk business relationships.
In accordance with FINMA’s decision, HSBC Private Bank (Suisse) is not allowed to open new business relationships with politically exposed persons until these measures have been fully implemented.
The regulator identified several high-risk transactions, amounting to over $300 million, conducted between 2002 and 2015. These transactions, originating from a government institution in Lebanon, were transferred to Switzerland and then quickly moved back to Lebanon. The lack of adequate documentation and clarification made it impossible to establish the legitimacy of these funds.
HSBC has stated its intention to appeal against FINMA’s decision. In their official response, HSBC acknowledged the historical nature of the issues raised by FINMA and emphasized their commitment to complying with anti-money laundering obligations across all markets. The bank stated, “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 initiated enforcement proceedings against HSBC in December 2021, accused the bank of severely violating financial market law by failing in its obligations to prevent money laundering involving two PEPs. The regulator mandated that HSBC may not establish any new business relationships with PEPs until it fully implements the required measures.
Moreover, FINMA has ordered HSBC to review all its high-risk business relationships and those involving PEPs. The bank must reassess the risk categorization of its customers, and an appointed audit agent will monitor the implementation of these measures on-site, reporting back to FINMA.
