Geneva’s state prosecutor has ended its money laundering investigation at HSBC’s Swiss branch after the bank agreed to pay the cantonal authorities CHF40 million ($43 million) in compensation without admitting guilt.
The bank said in a statement on Thursday that the payment was compensation to local authorities for past organisational failings and that no criminal charges would be filed.
On February 17, Geneva's public prosecutor carried out a dramatic raid of HSBC's lakeside Swiss office and initiated proceedings for suspected money laundering. This followed numerous investigations around the world into HSBC’s Swiss private banking unit, which faces allegations of aiding clients to avoid tax and laundering money from illicit sources.
The Geneva raid was carried out following so-called Swiss-leaks revelations initiated by the International Consortium of Investigative Journalists and leading media organisations, such as Le Monde, The Guardian and the BBC, which analysed the data taken from HSBC’s private banking arm by Hervé Falciani, a former employee of the bank. The files were transferred to France and to several other countries.
The media revelations on how HSBC handled the accounts for tax evaders and criminals sparked a political outcry around the world.
HSBC has not made any admission of guilt. In a statement it said it had “fully co-operated with the investigation throughout and will not face criminal charges”.
It said its Swiss private bank had “undergone a radical transformation”, cutting its client base by almost 70% to 10,000 accounts in 2014.
“The Geneva Prosecutor acknowledges the progress the bank has made in recent years, including the improvements in its compliance function, internal processes and technology,” it said.
At a press conference in Geneva chief prosecutor Olivier Jornot criticised Switzerland’s legal system.
“This matter shows the weakness of Swiss law in the matter of entry of criminal funds into the financial system,” claimed Jornot.
Although HSBC has settled financially, Jornot said it was a final warning: “This is an excuse which will only apply once.”
The February raid by Geneva’s prosecutor came a day after Switzerland’s federal prosecutor, Michael Lauber, had told the press there was no call for a probe into wrongdoing at the bank. Swiss financial regulator FINMA also stated that it would not investigate.
Lauber claimed it was not appropriate for the state to launch an investigation into HSBC based on stolen data. Tax evasion, as opposed to fraud, has traditionally been viewed as a civil offence in Switzerland, but this distinction has now been largely erased in matters of international tax cooperation.
The Swiss authorities have accused Falciani of being a thief and tried to extradite him for breaching Swiss banking secrecy.
Falciani was indicted on charges of industrial espionage and violating bank secrecy laws by the Federal Prosecutors Office in December 2014.
swissinfo.ch with agencies