Regulation & ComplianceHSBC pays $43 million to avoid prosecution for money laundering

HSBC pays $43 million to avoid prosecution for money laundering

To resolve accusations of money laundering in their private Swiss arm, HSBC have paid $43 million to Olivier Jornot, a Geneva prosecutor, as the bank prepares to disclose their strategy to investors next week.

To resolve accusations of money laundering in their private Swiss arm, HSBC have paid $43 million to Olivier Jornot, a Geneva prosecutor, as the bank prepares to disclose their strategy to investors next week.

The strategy update is rumoured to reveal information about a multibillion dollar reduction of assets, the $5 billion sale of HSBC’s Brazilian and Turkish units and thousands of job cuts.

At the update, chief executive Stuart Gulliver will be given the chance to change attitudes towards HSBC’s Swiss arm after being criticised by government members and pressured by investors for slow financial performance.

However, HSBC feel that being allowed to pay fines instead of being charged means that they have strengthened controls, because most of what they are being accused of happened 10 years ago, but Jornot blames Swiss law for not taking action sooner.

In February, Jornot’s officials raided the bank’s Geneva offices after reports of involvement in tax dodging by clients in Switzerland. But, as tax evasion is not a crime in this country, the Swiss federal prosecutor and the financial regulator Finma did not initially want to investigate, especially as HSBC have not admitted any wrongdoing.

The fine works out as 0.03% of HSBC’s market value which Jornot believes is a good deal, according to The Financial Times.

In a statement released by the bank last year, it said that the Swiss unit have undergone a radical transformation by reducing their client base by 70% to 10,000 accounts and also comments on how Jornot accepts how HSBC has changed. “The Geneva prosecutor acknowledges the progress the bank has made in recent years, including the improvements in its compliance function, internal processes and technology,” according to the statement.

The bank is currently also under investigation over tax evasion in the US, France, Belgium and Argentina. Alongside this, HSBC could also be accused of rigging foreign exchange markets, mis-selling US mortgage securities and fixing of precious metal prices.

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