HSBC and the Salameh affair: alarm bells ignored for a decade

Zürich, Lausanne, 17. March 2025

Facing prosecution in a dozen countries including Switzerland, Riad Salameh is suspected, in collaboration with his brother Raja, of having defrauded the Central Bank of Lebanon (BDL), which he headed from 1993 until 2023, of hundreds of millions of dollars. In Geneva, allegedly illegal funds amounting to almost 330 million dollars have been identified in accounts at HSBC Private Bank (Switzerland). Public Eye has obtained unpublished court documents showing that, for more than a decade, the bank chose to ignore all the warnings issued by its own compliance department. This case clearly highlights the flaws in the Swiss anti-money-laundering system.

The criminal proceedings initiated in Switzerland against Riad Salameh and his brother Raja on suspicion of aggravated money laundering have established that, between 2002 and 2015, almost 330 million US dollars were transferred from the BDL to HSBC Private Bank (Switzerland) in Geneva. The money was deposited in an account held by Forry Associates, a small offshore entity registered in the British Virgin Islands. Its declared beneficial owner is Raja Salameh. Some of this money was then distributed to accounts in Lebanon, as well as to offshore companies which had Riad Salameh, who was still governor of the BDL at the time, as the ultimate beneficiary. According to investigators, these allegedly illegal funds were said to have enabled the Salameh family to accumulate real-estate assets in several countries including Switzerland, as we revealed last October. 

Unpublished documents obtained by Public Eye describe the way in which this sensitive case was handled by HSBC Private Bank (Switzerland). Between 2006 and 2013, nearly 20 warnings and requests for clarification were sent by internal compliance department to the managers of the account held by Forry Associates. Apart from the steady inflow of funds, there were also question marks over the many transfers to other obscure companies. However, the management of HSBC Private Bank (Switzerland) systematically ignored the warnings, primarily because of reassurances it received from the banker responsible for the account, who held a senior position within the bank at the time. 

This deep dive into the inner workings of the compliance function of a large private bank illustrates the weaknesses of the Swiss anti-money-laundering system, which relies on financial intermediaries themselves to report their client if suspicions arise. Although the banking relationship with Raja Salameh finally came to an end in the spring of 2016, it was not until the summer of 2020 that HSBC Private Bank (Switzerland) informed the Money Laundering Reporting Office Switzerland (MROS) of its suspicions, when the public pressure began to grow. 

So far, the Geneva-based bank emerged with a largely intact reputation from the affair. But in June 2024, FINMA, the Swiss Financial Market Supervisory Authority, ordered the bank to review its internal procedures. HSBC Private Bank (Switzerland) was temporarily banned from establishing new business relationships with politically exposed persons. Then the affair took a new turn. In January, the Lebanese government filed a criminal complaint in Switzerland. According to our information, this would be directed against Riad and Raja Salameh and other parties involved, including HSBC.  The aim is to broaden the scope of the Swiss investigation and to become a plaintiff in order to obtain possible compensation. 

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