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HSBC’s Swiss private banking unit is terminating relationships with a significant number of wealthy clients in the Middle East as it faces intense regulatory pressure over alleged money laundering and high-risk accounts.
According to a report from the Financial Times, the bank is cutting ties with more than 1,000 clients from countries including Saudi Arabia, Lebanon, Qatar and Egypt. The move is part of a broader strategic initiative to reduce the bank’s exposure to clients deemed high-risk.
The cull comes after the Swiss Financial Market Supervisory Authority (FINMA) found that HSBC Private Bank (Suisse) SA had “seriously violated financial market law” by failing to perform adequate due diligence on high-risk accounts, particularly those belonging to politically exposed persons (PEPs).
In a separate probe, Swiss authorities, in collaboration with their French counterparts, have launched a criminal investigation into the bank’s Swiss unit over suspected money laundering, sources said.
The investigation is reportedly linked to the alleged embezzlement of public funds by the former governor of Lebanon’s central bank, a case involving transactions of more than $300 million.
Multiple news reports note that HSBC has acknowledged the ongoing investigations and stated that the outcome “could be significant.” The bank was previously barred from onboarding new PEP clients until it could prove it had strengthened its anti-money laundering controls. The latest client terminations are seen as a direct consequence of this increased regulatory oversight.
HSBC CEO of International Wealth and Premier Banking Barry O'Byrne said: "We have an absolute commitment to both our Middle East and Swiss wealth businesses. We're proud to have been the first international bank in the Middle East, continue to have deep roots in the region and are fully committed to our customers who are at the heart of everything we do. Switzerland plays a key role in how we support clients globally – it's one of our core wealth hubs. Our strategy is to significantly grow our Wealth business, and we have been doing so successfully. This strategy will see continued investment in both our Middle East and Swiss businesses to deliver best-in-class service to our customers."
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