HSBC Holdings Plc's Swiss private banking unit has been charged by French prosecutors with alleged organized money laundering and conspiracy in connection with the suspected embezzlement of funds by former Lebanese central bank governor Riad Salameh. The bank faces accusations of complicity in offenses including embezzlement of public funds, breach of trust, and bribery of a public official. This development stems from a broader investigation into a scheme that allegedly siphoned hundreds of millions of dollars from Lebanon's central bank, Banque du Liban (BDL).
The core of the allegations involves an entity called Forry Associates Ltd., a shell company owned by Raja Salameh, Riad Salameh's brother. Prosecutors contend that commissions paid to the BDL by Lebanese commercial banks were diverted to Forry Associates between 2002 and 2015. Leaked records and investigations by media outlets and NGOs like Public Eye suggest that HSBC failed to report suspicious transactions totaling hundreds of millions of dollars flowing into an account linked to Raja Salameh's Forry Associates, despite multiple red flags. The alleged scheme was facilitated by lax anti-money laundering controls at HSBC Geneva, and the undue influence of a close relationship manager who was a friend of Raja Salameh.
HSBC had previously disclosed it was under investigation by French and Swiss authorities for money laundering related to two historical client relationships. The Swiss Financial Market Supervisory Authority (FINMA) had also concluded in 2024 that HSBC Geneva "seriously violated financial market law" in relation to the case and banned the bank from taking on new politically exposed customers. Following these inquiries, HSBC reportedly terminated relationships with over 1,000 clients in the Middle East, including from Lebanon and Saudi Arabia. Lebanese prosecutors charged Riad Salameh with embezzling more than $330 million in public funds in 2022, and he has an international arrest warrant out for him from France since May 2023. HSBC's Swiss unit has been ordered to pay an $80 million bail.
