HSBC Geneva settles with Swiss on Money laundering claims

HSBC Settlement with the Swiss
HSBC Settlement with the Swiss

PerformanceGurus Staff

Hongkong and Shanghai Banking Corporation (HSBC) agreed to settle with the Swiss to pay a fine of over 40 million Swiss francs for its money laundering claims.

While imposing the fine on June 4, the Geneva  authorities issued a stern  warning to the HSBC Swiss subsidiary against  “organizational deficiencies” that has created loopholes to allow money laundering. While announcing this settlement, Geneva’s prosecutor Olivier Jornot launched a stinging attack on his own country’s financial laws, calling for a reform of the country’s secretive banking system.

“This matter shows the weakness of Swiss law in the matter of entry of criminal funds into the financial system,”.

“When we have a law that doesn’t punish financial intermediaries accepting doubtful funds then we have a problem. This problem dates from long before the HSBC affair.”
– Olivier Jornot

According to the terms of the settlement arrived at between the bank and the Swiss authorities,  the  HSBC will not face prosecution and the  findings of the ongoing  probe into alleged money laundering will not be made public.

The settlement will not halt the probe into individual tax evaders who are account holders of the HSBC. India is keenly watching the result of the probe and has repeatedly sought assistance of the Swiss government to zero in on the culprits.

In a statement, HSBC said: “The investigation conducted by the public prosecutor of the canton of Geneva into HSBC Private Bank (Suisse) has been formally closed today. The investigation found that neither the bank nor its employees are suspected of any current criminal offences

On May 29, the Switzerland government served noticed on five Indian nationals with Swiss bank accounts. These five person named in the official Swiss Gazette  were being investigated for tax evasion. Swiss media had also reported names of two others Indians who have been served similar notices and given option to file an appeal against the findings of the tax authorities.

A special Investigation team set up by the  Supreme Court  here is probing the names of 628 Indians, who figure on the HSBC list. The probe has not found any illegality in over 200 such accounts. The Indian Express has detailed some of the leading industrialists from India as being part of this HSBC list. Some of the leading lights have issued denials and it remains to be seen as to how the government will move to bring back these assets since they may have already flown the coop to a different bank(s) in a different tax haven(s). Some prominent names went missing in this report from the Indian Express, where they covered the Black Money route used.

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