The reported removal of such clients follows actions by the Swiss Financial Market Supervisory Authority, aka FINMA, as announced in June a year ago.

The Swiss private banking arm of HSBC has offloaded more than 1,000 wealthy Middle Eastern clients from its books in the face of regulatory scrutiny of high-risk clients, media have reported. 

The bank will end its relationship with customers from countries such as Saudi Arabia, Qatar, Lebanon and Egypt – many of whom have assets of more than $100 million – the Financial Times said on 24 August, citing unnamed sources.

WealthBriefing contacted HSBC yesterday for comment; it had not received a comment at the time of going to press, but may update this report in due course.

The report said that HSBC’s Swiss private bank has told affected clients that they would no longer be able to use its services; it would be sending letters advising them to move their accounts elsewhere in the coming months, a source said. 

The report quoted Barry O’Byrne, chief executive of HSBC’s International Wealth and Premier Banking unit, as saying that the bank had an “absolute commitment to both our Middle East and Swiss Wealth businesses.”

The move was initially reported by Bloomberg.

On 18 June 2024, the Swiss regulator FINMA said it had banned HSBC's Swiss private banking arm from taking on politically exposed persons (PEPs) after the watchdog found that HSBC had not carried out necessary due diligence for multiple transactions between 2002 and 2015. 

In its statement last year, FINMA said: “HSBC Private Bank (Suisse) SA breached its obligations in the prevention of money laundering in connection with two politically exposed persons and thereby seriously violated financial market law. This was established in the context of enforcement proceedings by the Swiss Financial Market Supervisory Authority FINMA, which has imposed measures to ensure that compliance with the law is restored. The decision orders that, until these measures have been implemented in full, the bank may not enter into any new business relationships with politically exposed persons."

The statement continued: “HSBC Private Bank (Suisse) SA operated two high-risk business relationships where it failed to carry out an adequate check of either the origins, purpose or background of the assets involved.

“In addition, a number of high-risk transactions were insufficiently clarified and documented, making it impossible to establish the legitimate nature of these transactions. The transactions in question were carried out between 2002 and 2015 and amounted to a total of more than $300 million. The funds, which originated from a government institution, were transferred from Lebanon to Switzerland and – generally after a short time – primarily flowed back to other accounts in Lebanon. At no time did the bank clarify why a transitory account held with it was used for these transactions.

“In its checks, the bank failed to recognise 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.

“The bank further failed to notify the Money Laundering Reporting Office over a protracted period. It still did not submit a report even in 2016, when it decided to close the relevant business relationships in light of various risks. Such a report was not filed until September 2020. By doing so, the bank did not comply with either the reporting obligations or the anti-money laundering requirements, in serious breach of supervisory provisions,” FINMA said.