HSBC violated money laundering regulations

The Swiss financial market regulator FINMA ruled that HSBC Private Bank (Suisse) SA violated money laundering regulations.

The ruling followed enforcement proceedings initiated by FINMA in December 2021 and focused on the financial institution’s banking relationship with two anonymous politically exposed persons, FINMA said in a press release on Tuesday (June 18).

“HSBC Private Bank (Suisse) SA engaged in two high-risk business relationships for which it failed to conduct appropriate checks on the origin, destination and source of the assets concerned,” FINMA said in a statement. “In addition, many high-risk transactions were insufficiently explained and documented, making it impossible to establish the legal nature of these transactions.”

According to the statement, these transactions took place between 2002 and 2015 and amounted to over USD 300 million and concerned funds from a government institution that were transferred from Lebanon to Switzerland and back to Lebanon.

After reaching out to PYMNTS for comment, HSBC emailed a statement saying it plans to appeal the decision.

“We acknowledge the issues raised by FINMA are of a historic nature,” the statement said. “HSBC takes its anti-money laundering (AML) responsibilities very seriously, including compliance with all laws and regulations in every market in which we operate. As we plan to appeal this decision, it would be inappropriate to comment further.”

FINMA said in its press release that its decision directs HSBC Private Bank (Suisse) SA not to enter into new business relationships with politically exposed persons until it conducts a review of the anti-money laundering aspects of all its existing high-risk business relationships and business relationships with persons holding politically exposed positions; checks the risk categorization presented by other clients; and obtaining confirmation that these reviews have been completed by the audit agent.

According to the announcement, the bank must also provide FINMA with detailed information on the responsibilities of the board and executive management and how this information is allocated.

In an earlier regulatory matter, the UK’s Competition and Markets Authority (CMA) found in January 2023 that HSBC had breached the Open Banking Order.

The CMA then found that between 2017 and 2022 the bank failed to publish required information or published inaccurate information on more than 50 occasions.