Swiss prosecutors strive to explain 7-year delay to money-laundering probe

Swiss prosecutors are scrambling to explain why they took seven years to probe suspicions of money laundering aroused by data stolen from HSBC Holdings Plc’s private bank in Geneva.

Inspired by Feb 8 disclosures by the Washingtonbased International Consortium of Investigative Journalists that HSBC did business with arms dealers, blood-diamond traffickers and other criminals, Geneva prosecutors last week seized client records from the bank’s offices in the city. That leaves the Swiss Attorney General Michael Lauber defending years of inaction as federal prosecutors focused instead on apprehending the data thief Herve Falciani.

“I know this situation must look shocking,” Lauber told weekly Swiss magazine L’Hebdo in an interview published on Feb 18. “But you have to understand the legal circumstances around this information are very delicate.”

Lauber said prosecutors weren’t entitled to scrutinize the Falciani files for moneylaundering offenses because mining stolen data contra- venes the 80-year-old bank secrecy rules that helped Switzerland become the world’s biggest center for offshore wealth. That didn’t deter Geneva prosecutors Olivier Jornot and Yves Bertossa, who said the trove of information dubbed Swiss Leaks gave them cause to investigate. The Swiss have been stung into action, concludes Matthew Parish, managing director of Geneva law firm Gentium Law.

“The Swiss didn’t want to get involved,” said Parish, commenting on the initial reluctance of federal prosecutors to investigate. “It’s difficult to refute the suggestion that the Geneva prosecutor’s bank search was driven in substantial part by a need to be seen to be doing something, rather than driven by a new set of facts or evidence.”