Authorities raid HSBC office
THE Geneva public prosecutor yesterday searched HSBC’s lakeside Swiss office after opening an inquiry into allegations of money laundering, the second probe to hit the bank this week.
THE Geneva public prosecutor yesterday searched HSBC’s lakeside Swiss office after opening a criminal inquiry into allegations of aggravated money laundering, the second probe to hit the bank this week.
Europe’s largest lender is in regulators’ sights after details of how its Swiss private bank allegedly helped wealthy clients evade taxes were leaked to the media and published last week.
The Geneva prosecutor said he had launched an investigation following the allegations and could extend it to individuals. “A search is under way in the premises of the bank, led by attorney-general Olivier Jornot and prosecutor Yves Bertossa.”
HSBC has apologised to customers and investors for the previous failings of its Swiss business and has said the operation has since been overhauled.
However, the UK’s financial watchdog said on Monday that it would investigate HSBC and focus on its current behaviour.
HSBC’s Swiss unit has been in the spotlight since 2008 when a former information technology employee fled Geneva with files allegedly showing evidence of tax evasion by clients.
The French tax authorities later passed the information to tax authorities around the world. US officials opened a criminal investigation and French magistrates put the bank under formal investigation in November.
Tax authorities in Belgium, Austria and Argentina are also looking at the allegations.
HSBC’s private bank has major operations in Switzerland, London and Hong Kong, and CE Peter Boyles is based in the lakeside Geneva office.
“We have co-operated continuously with the Swiss authorities since first becoming aware of the data theft in 2008 and we continue to co-operate,” HSBC said in a statement.
The bank has said compliance and controls at its Swiss private bank in the period up to 2007 fell short of requirements, but that the business had been transformed in recent years.
Swiss financial regulator Finma, which had investigated HSBC and criticised its internal controls in 2011, said it was aware of the proceedings by the Geneva prosecutor and was in contact with HSBC.
HSBC’s main concern may be that US authorities could look at re-opening a 2012 deferred prosecution agreement, which involved a $1.9bn fine after the bank was found to have helped move hundreds of millions of dollars in illicit drug money through the US financial system.
The disclosures about the Swiss bank have sparked a political row in the UK over practices at HSBC and whether tax authorities had done enough to pursue possible wrongdoers.
HSBC CE Stuart Gulliver said recent allegations had been “painful”. They are likely to overshadow HSBC’s annual results on Monday and Mr Gulliver and chairman Douglas Flint are due to testify before British legislators on Wednesday.