HSBC to Pay $43 Million to Resolve Money-Laundering Probe

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HSBC Holdings Plc agreed to pay 40 million Swiss francs ($43 million) to close an investigation by Geneva prosecutors into allegations of money laundering at its Swiss private banking unit.

The bank will not face criminal charges and instead will pay the penalty for “past organizational deficiencies,” the lender said in a statement. The amount of the fine was based on an estimate of profits the bank made from the accounts under scrutiny, and costs for public damages, Geneva Public Prosecutor Olivier Jornot told journalists at a briefing on Thursday.

“We believe we’ve struck a good deal, but it’s up to the bank to decide if they think so too,” Jornot said at the briefing, adding that the fine is the largest the Geneva prosecutor’s office has ever levied against an institution.

Geneva authorities raided HSBC’s Swiss unit on Feb. 18 after announcing an investigation earlier that day. HSBC had come under fire that month when the International Consortium of Investigative Journalists published details of how the bank’s Swiss unit handled accounts for tax evaders and criminals.

Jornot said that while his office doesn’t usually open an investigation based on press reports, this was an exceptional case with much public interest.

The press revelations stemmed from a list of HSBC clients stolen by former employee Herve Falciani in 2008. He shared the information with authorities in France, sparking tax probes around the world. Falciani was indicted on charges of industrial espionage and violating bank secrecy laws by the Swiss Attorney General’s office in December, which conceded that he has been sometimes “celebrated as a hero abroad.”

HSBC’s Swiss unit said it “acknowledged that the compliance culture and standards of due diligence in place in the bank in the past were not as robust as they are today,”

The bank said it had implemented numerous changes to prevent tax evasion and money laundering in the future, and has cut its client base by about 70 percent since 2007 to 10,000 accounts last year.

The Geneva prosecutor said he doesn’t plan to charge any current employees of the bank.

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