HSBC accused of AML violations by Swiss regulator
Global banking giant HSBC has been forced to review the anti-money laundering (AML) processes at its private banking business in Switzerland after the financial regulator accused it of a “serious violation of supervisory law”.
The Swiss Financial Market Supervisory Authority (Finma) has ordered that the bank may not take on any new high-risk customers until its review is complete and compliance has been restored.
The violations relate to a 13-year period between 2002 and 2015 when HSBC Private Bank (Suisse) failed to carry out checks on two politically exposed persons (PEPs).
Between the two high-risk customers, more than $300m of transactions were inadequately monitored and documented. The funds originated from a government institution and were transferred from Lebanon to Switzerland. They were then sent back to various other accounts in Lebanon shortly after.
According to Finma, the bank failed to clarify why a transitory HSBC account was used for the transactions. Furthermore, the lack of documentation made it “impossible to establish the legitimate nature of these transactions”, stated the regulator.
HSBC was also criticised by Finma for failing to notify the Money Laundering Reporting Office even after ending the commercial relationship with the two unnamed PEPs due to the high risk involved. In fact, stated Finma, a report was not submitted by HSBC until 2020, four years after terminating the respective banking relationships.
“By doing so, the bank did not comply with either the reporting obligations or the anti-money laundering requirements, in serious breach of supervisory provisions,” stated Finma.
HSBC must now conduct a review of its processes, ensure all other customers are correctly categorised according to their risk, and inform the regulator of the various responsibilities held by its directors.
The decision has not yet entered into force and HSBC has announced that it intends to appeal the decision. “HSBC takes its anti-money laundering obligations very seriously, including complying with all laws and regulations in every market we operate in,” said the bank, while adding that the issues brought up by Finma were “historic” in nature.
