HSBC Targeted in Swiss Probe Linked to Ex-Lebanon Central Banker

(Bloomberg) — HSBC Holdings Plc’s Swiss private bank is the focus of a Swiss investigation into suspected money-laundering connected to the alleged embezzlement of hundreds of millions of dollars by the former head of Lebanon’s central bank.

Swiss federal prosecutors opened the probe in January into HSBC Private Bank (Suisse) SA, an unnamed individual and four other “unknown persons” in relation to the case, it said in a statement on Wednesday. It declined to comment further given the probe is ongoing.

Since 2020, Swiss prosecutors have been investigating the case surrounding Riad Salameh, Lebanon’s former central bank governor, who was then charged last year by Lebanese prosecutors with embezzling public funds, forgery, illicit enrichment and money laundering. Salameh was head of Lebanon’s central bank for three decades before stepping down.

He’s been sanctioned by both the US and the UK, with the US Treasury accusing him of abusing his position of power to enrich himself and his associates. Salameh has repeatedly denied allegations against him and has said that his fortune was amassed during his previous career in finance.

Earlier on Wednesday, the UK bank said that it was being investigated by Swiss and French law enforcement agencies over its involvement in alleged money laundering. The investigations are at an early stage and authorities are examining potential offenses related to what the bank said were “two historical banking relationships,” according to a statement. HSBC warned the possible impact on the firm could be significant, though it was “not practicable” to predict what that might be.

Switzerland’s financial regulator last year announced that it had found that HSBC’s private bank had failed to carry out adequate checks on high-risk accounts owned by politically exposed persons. At the time, Finma said it had found serious violations of the law related to a total of more than $300 million of transactions carried out between 2002 and 2015.

HSBC was ordered to conduct a review of its anti-money laundering systems and of all of its high-risk business relationships and relationships with politically exposed clients. The bank was also told that it could not take on any more politically exposed persons as clients until the work was complete.

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