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Switzerland orders Lebanon bank to pay over $4m for money laundering violations

March 26, 2024 at 6:45 pm

Customers use an automated teller machine (ATM) outside an Audi Bank SAL bank branch in Beirut, Lebanon. [Hasan Shaaban/Bloomberg via Getty Images]

Financial authorities in Switzerland have reprimanded Lebanon’s largest bank over severe money laundering violations, following an investigation into millions in unexplained payments to political figures.

In a statement on Monday, Swiss market regulator, Finma, announced that it had ordered Banque Audi — the Swiss subsidiary of Lebanon’s Bank Audi — to pay back 4 million Swiss Francs ($4.4 million) in “illegally generated” profits relating to suspicious transactions, as well as to increase its capital buffer by 19 million Swiss Francs ($21 million).

Although it does not have the statutory power to issue fines, Finma stated that Banque Audi is also banned from entering into new relationships with “politically exposed persons” or other high-risk corporate clients for the next two years.

In 2021, as part of a broader investigation into a dozen Lebanese lenders with Swiss subsidiaries, Finma reportedly launched a probe into Riad Salameh, the former Governor of Lebanon’s Central Bank who was charged the following year by prosecutors in Lebanon for allegedly embezzling over $330 million in public funds.

Currently under criminal investigation in Switzerland and seven other jurisdictions, Salameh also has arrest warrants issued against him by France and Germany.

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With a long history of ties to Lebanon’s political elite, Bank Audi is accused by Finma of failing to inquire about the purpose of large transfers made to and from Swiss accounts in the names of “politically-exposed persons” (PEPs) and to report suspicious transactions to Switzerland’s official anti-money laundering body.

Examples cited by Finma include one where Banque Audi had accepted a large payment from a Lebanese PEP to a Swiss account held by a senior Lebanese official, after which the bank failed to abide by money-laundering regulations and obtain an explanation of what the payment was for.

Although the bank has agreed to internal reforms and the staff who approved those transactions have left Switzerland, Finma stated that the bank “has decided to continue certain high-risk client relationships”.

Despite Lebanon’s extensive issues with money laundering and its continued lack of control over the practice and the country’s elite, Beirut managed to stay off the international Financial Action Task Force’s (FATF) money laundering watch list last year, with Bank Audi’s agreement to internal reforms seen as an effort to remain off that “grey list”.

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