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HSBC to pay $43 million Geneva money laundering settlement

Reuters , Thursday 4 Jun 2015
HSBC bank (Photo: Reuters)
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HSBC (HSBA.L) agreed on Thursday to pay Geneva authorities 40 million Swiss francs ($43 million) to settle a money laundering investigation at its Swiss private bank, one of a number of probes facing its Geneva-based wealth manager.

Leaked files published earlier this year sparked allegations that HSBC's private bank may have enabled clients to conceal millions of dollars of assets and dragged Europe's largest lender into the sights of regulators including Geneva's public prosecutor.

Following four months of inquiries, Geneva authorities said they had closed their investigation after HSBC agreed to pay 40 million francs for wrongdoing, the largest such figure imposed by local prosecutors.

"HSBC for several years suffered organisational deficiencies in the fight against money laundering," Geneva's chief prosecutor Yves Bertossa told a news conference.

Its business handling Mediterranean and Israel-based funds was at the heart of the investigation which focused on four clients after documents were seized, he said, giving no details.

Olivier Jornot, Geneva's attorney-general, told reporters: "This affair shows the weakness of Swiss law in fighting the entry of criminal funds into the financial circuit."

"It's easy to ask public prosecutors afterwards to carry out titanic investigations. But on the other hand when we have a law that practically doesn't punish intermediaries accepting money of dubious origin, there is a problem."

A source close to the case said that the Geneva authorities decision to reach a settlement was based on "judicial realpolitik".

The bank said in a statement that no criminal charges would be filed and that neither the bank nor its employees were suspected of any current criminal offences.

HSBC's Swiss arm is still facing investigations by U.S., French and Belgian authorities.

The Swiss unit has been in the spotlight ever since a former IT employee Hérvé Falciani fled Geneva in 2008 with files which were alleged to show evidence of tax evasion by its clients.

HSBC has apologised to customers and investors over the previous failings of its Swiss business and has said the operation has since been overhauled.

It said the Geneva prosecutor had acknowledged the progress the bank had made in recent years.

Switzerland's financial markets regulator FINMA had already found fault with HSBC in 2010-2011 for its poor internal controls and violations of money laundering guidelines.

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