HSBC fined €38 million over money-laundering claims

According to international media, HSBC has been ordered to pay a record 40 million Swiss francs (€38m) and it has been given a final warning by the Geneva authorities for “organisational deficiencies” which allowed money laundering to take place in the bank’s Swiss subsidiary.

The Guardian reports that the settlement means the Swiss will not prosecute HSBC or publish the findings of the probe into alleged aggravated money laundering.

Geneva’s chief prosecutor, Olivier Jornot, cautioned that the bank was on notice, saying: “This is an excuse which will only apply once.”

Jornot launched a stinging attack against his own country’s financial laws, adding his voice to a growing a number of Swiss politicians and campaigners calling for reform of the country’s secretive banking system.

“This matter shows the weakness of Swiss law in the matter of entry of criminal funds into the financial system,” he said.

The Genevan authorities said the payment, which is being described as “compensation” rather than a fine, is in line with the profits obtained by HSBC from processing illicit funds.

Ccording to Jornot, the probe was prompted, by the Guardian, the BBC, Le Monde and other media coordinated by the International Consortium of Investigative Journalists. This showed that HSBC’s Swiss arm banked the proceeds of political corruption and accepted deposits from arms dealers while helping wealthy people evade taxes.

According to the Guardian, on 18 February, Jornot ordered a raid on HSBC’s Geneva offices, 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. Lauber had argued it was not appropriate for the state to launch an investigation into HSBC based on stolen information.

“The investigation conducted by the public prosecutor of the canton of Geneva into HSBC Private Bank (Suisse) has been formally closed today. The investigation found that neither the bank nor its employees are suspected of any current criminal offences,” HSBC said in a statement.

“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 added.

HSBC claims to have undergone a radical transformation in recent years, with initiatives designed to prevent its banking services being used to evade taxes or launder money. The repositioning has reduced its client base by almost 70%, from about 30,000 accounts in 2007 to some 10,000 in 2014.