A Swiss regulator has ordered the disgorgement of illicit profits from a local subsidiary of a Lebanese bank for serious violations of financial markets law.
This article was first published in Lexology PRO's sister title Global Investigations Review (GIR) on 25 March 2024.
The Swiss Financial Market Supervisory Authority (Finma) said on 25 March that it had ordered the subsidiary of Lebanon-based banking group Banque Audi, to pay 3.9 million Swiss francs (US$4.3 million) in disgorgement of illegal profits after finding that the bank breached its obligations to prevent money laundering.
The regulator said on 25 March 2024 that the order ends proceedings that it started against Banque Audi (Suisse) in 2022 following an on-site inspection a year before. During that examination, Finma found that the bank did not properly clarify the origin of assets belonging to high-risk clients.
Finma said that the bank did not sufficiently investigate allegations in the press referring to the “possibly unlawfully acquired assets” by politically exposed persons among the subsidiary’s clients.
Finma also found that Banque Audi (Suisse) did not fulfil its duty to provide information to the regulator by failing to disclose or submit an internal audit report that pointed to shortcomings in anti-money laundering and demanded improvements to be made, during the 2021 inspection.
The bank’s subsidiary cooperated with Finma in its enforcement proceedings and undertook remedial actions, including increasing its compliance resources and replacing people in “key positions”, Finma said.
The bank parted ways with some of its clients, but decided to continue with some high-risk relationships, Finma said. As a result, the regulator has ordered the bank to set aside a “risk surcharge” of 19 million Swiss francs (US$21.1 million) in capital, to meet its higher risk profile. The bank will also be required to appoint an auditor to monitor the implementation of additional measures imposed by Finma, including “corrections” to the bank’s anti-money laundering defence mechanisms.
Finma can revoke a business’ licence, order its liquidation, issue industry bans and confiscate profits generated illegally but it does not have the power to fine financial institutions or individuals. Swiss academics and financial professionals have called on the government to strengthen the regulator’s powers.
Banque Audi (Suisse) declined to comment.