Swiss find Lebanon’s biggest bank guilty of serious money laundering breaches
Finma uncovers millions of francs in unexplained payments by Banque Audi to senior political figures
Swiss authorities have censured Lebanon’s largest bank for serious money laundering violations, after uncovering millions of francs in unexplained payments to senior political figures routed through the wealthy alpine country.
The investigation into Bank Audi by Finma, Switzerland’s market regulator, was triggered by a corruption probe into Riad Salameh, the former longtime governor of Lebanon’s central bank, according to people familiar with the matter.
Salameh, who has denied all allegations of misconduct, was charged by prosecutors in Beirut in 2022 with embezzling more than $330mn in public funds.
He is also under criminal investigation in Switzerland and seven other jurisdictions, probing allegations of financial crimes. These include France and Germany, which have issued warrants for his arrest. He stepped down from his post last summer.
In a statement on Monday, Finma said it had ordered Banque Audi — the Swiss subsidiary of Bank Audi — to pay back SFr4mn in “illegally generated” profits relating to suspicious transactions and increase its capital buffer by SFr19mn.
Finma — which does not have the statutory power to issue fines — said Banque Audi was also banned into entering into new relationships with “politically exposed persons” or other high-risk corporate clients for the next two years.
The bank has agreed to internal reforms, the regulator said. The staff who approved the transactions have left Switzerland.
Nevertheless “[Banque Audi] has decided to continue certain high-risk client relationships,” Finma noted.
Bank Audi did not respond to a request for comment.
Finma opened its probe in 2021, as part of a broad investigation into 12 Lebanese lenders with Swiss subsidiaries.
An on-site inspection of Banque Audi’s premises in Geneva that year revealed “serious shortcomings in the prevention of money laundering”, Finma said.
The bank was also found to have withheld internal audit findings from the watchdog which had clearly flagged the money-laundering concerns. The bank failed on multiple occasions to report suspicious transactions to Switzerland’s official anti-money laundering body.
In an anonymised example, Finma cited an instance where Banque Audi had accepted a large payment from a Lebanese “politically-exposed person” — known as a PEP in banking terminology — to a Swiss account held by a high-ranking Lebanese official.
The bank did not obtain an adequate explanation of what the payment was for, as money-laundering regulations require.
Finma said there were numerous other such examples relating to sums paid to and by other politically exposed individuals, who had been the subject of press articles about corruption and graft. The bank made no attempts to inquire about the purpose of large transfers made to and from Swiss accounts in their names, Finma said.
Bank Audi has a history of ties to Lebanon’s political elite.
Its founder, Raymond Audi, served as a government minister while maintaining his position as bank chair. Its current board of directors and major shareholders include several PEPs, as well as certain members of the ruling families of the United Arab Emirates and Kuwait.
Lebanon is still mired in one of the worst economic crises of its modern history.
The crisis has forced three-quarters of the population into poverty, while the Lebanese currency has lost more than 95 per cent of its value against the US dollar since the country went into economic meltdown in October 2019 after decades of state-sponsored corruption and financial mismanagement by successive governments.