Switzerland's financial regulator, Finma, has prohibited HSBC’s Swiss private bank from onboarding prominent public figures as clients after discovering violations of anti-money laundering regulations, The Financial Times reported on Tuesday.

The regulator imposed multiple sanctions on HSBC's Swiss subsidiary related to transactions from 2002 to 2015, involving over $300 million transferred between Lebanon and Switzerland. Despite closing the accounts in 2016 due to associated risks, HSBC did not report these transactions until September 2020.

“In its checks, the bank failed to recognize the indications of money laundering presented by these transactions; it likewise failed to satisfy requirements for the initiation and continuation of customer relationships with politically exposed persons, and was thus in serious breach of its due diligence obligations,” Finma said.

Finma stated that HSBC's due diligence was severely lacking, as the bank did not detect the clear signs of money laundering nor meet the requirements for initiating and maintaining relationships with politically exposed persons (PEPs). Consequently, the regulator has mandated HSBC to conduct an anti-money laundering review of all high-risk relationships and dealings with PEPs.

The bank is barred from forming new PEP relationships until this review is completed. Both Finma and HSBC refrained from disclosing the identities of the former clients involved.

HSBC later announced it is intending to appeal Finma's decision.

 “HSBC takes its anti-money laundering obligations very seriously including complying with all laws and regulations in every market we operate in,” the bank said.

Previously, the Financial Times reported that, in 2021, Switzerland's attorney-general launched an investigation into allegations that the governor of Lebanon’s central bank and his brother embezzled over $300 million through transactions to an obscure offshore company. A letter was sent to Lebanese authorities alleging that Riad Salameh and his brother, Raja Salameh, transferred $333 million from a central bank account to an HSBC Switzerland account under the name "Forry Associates" between 2002 and 2015. Investigators claimed that hundreds of millions were subsequently moved from Forry to Swiss bank accounts controlled by the Salameh brothers.