The Swiss banking arm of HSBC Holdings PLC (LSE:HSBA) "seriously violated financial market law" and has been temporarily banned from doing business with "politically exposed persons" after breaching money laundering prevention rules.
The Swiss financial regulator, Finma, said HSBC Private Bank failed to carry out adequate checks concerning two "high-risk business relationships" with politically linked individuals, failing to properly check either the origins, purpose or background of the assets involved.
Transactions between a government institution in Lebanon and Switzerland deemed "high risk" and valued at more than $300 million were "insufficiently clarified and documented, making it impossible to establish the legitimate nature of these transactions", the watchdog said in a statement today.
The transactions were carried out between 2002 and 2015, with funds originating from the government institution in Lebanon were transferred to Switzerland before flowing back to other accounts in Lebanon.
"At no time did the bank clarify why a transitory account held with it was used for these transactions," Finma said.
The regulator said that until a review by HSBC has been carried out into all its business with anyone politically linked or otherwise deemed high risk, the bank may not enter into any new business relationships with politically exposed persons.
Finma, which first opened proceedings against the bank in December 2021, said the bank failed to notify the money laundering reporting office even in 2016, when it decided to close the relevant business relationships in light of various risks. A report was not filed until September 2020.