June 18, 2024 11:13 GMT
HSBC Hit By Swiss Private Bank New Business Ban; Few Credit Impacts
FINANCIALS
HSBC (HSBC: A3/A-/A+) has been hit by a new business ban by FINMA in Switzerland over money laundering failures. No financial penalty included, and the ban appears temporary so we see few credit impacts here.
- FINMA’s statement indicates HSBC Private Bank (Suisse) SA has been found culpable of money laundering compliance failures around two (unnamed) politically exposed persons (PEPs) where as much as USD300m moved in and out of Lebanon between 2002 and 2015.
- It would appear the bank both failed to conduct the correct checks on the assets of these PEPs, as well as specific “high-risk transactions”. The relationships were closed in 2016 but the in-house MLRO was not notified until 2020.
- The bank is now banned from taking on new clients until FINMA is satisfied that remediatory measures have been correctly put in place. Compared to some of the egregious failures at peer banks, alongside HSBC’s relatively small weighting towards private banking, this appears a minor issue so see few credit metrics.
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