GENEVA – Geneva’s public prosecutor searched HSBC’s lakeside Swiss office on Wednesday after opening a criminal inquiry into allegations of aggravated money laundering, the second probe to hit the bank this week.
Europe’s largest lender is in regulators’ sights after details about how its Swiss private bank allegedly helped wealthy clients dodge taxes were leaked to the media and published last week.
In an unusual move, the Geneva prosecutor’s office notified the media of the raid as it was going on. It searched two HSBC offices and said its investigation could target individuals, who would be liable to a fine and up to five years in prison if found guilty of serious money laundering offences.
“As of now, we aim at securing all the information concerning the accounts and clients who have been mentioned as detaining funds resulting from criminal offences,” Attorney General Olivier Jornot told reporters.
“What we are looking for today is not yet proof. What we are looking for today are all documents, all information which will then allow us to make an analysis.”
HSBC has apologized to customers and investors over the previous failings of its Swiss business and has said the operation has since been overhauled.
However, Britain’s financial watchdog said on Monday it would investigate HSBC and focus on its current behavior.
HSBC’s Swiss unit has been in the spotlight since 2008 when a former IT employee, Hérvé Falciani, fled Geneva with files that are alleged to show evidence of tax evasion by clients.
Jornot said Swiss law made it impossible to carry out an investigation based on stolen evidence but his office could investigate if it secured the evidence itself.
Falciani’s files have been passed by the French tax authorities to their foreign counterparts around the world. U.S. officials then opened a criminal investigation and French magistrates put the bank under formal investigation last November.
The tax authorities in Belgium, Austria and Argentina are also looking at the allegations.
HSBC’s private bank has major operations in Switzerland, London and Hong Kong, and its chief executive, Peter Boyles, is based in the lakeside Geneva office. The office employs several hundred staff, who continued to work on Wednesday.
“We have cooperated continuously with the Swiss authorities since first becoming aware of the data theft in 2008 and we continue to cooperate,” HSBC said in a statement.
Jornot said that so far he had “no reproach” to make about the bank’s cooperation.
The search at HSBC’s lakeside address wrapped up after a few hours. But at a second HSBC site close to Geneva airport, the prosecutor and his team were still collecting evidence after 5 p.m. During the afternoon, a van arrived and stacks of white cardboard boxes full of paper archives were unloaded and delivered into the building.
The bank has said compliance and controls at its Swiss private bank in the period up to 2007 fell short of requirements but the business had been transformed in recent years.
Swiss financial regulator FINMA, which had already investigated HSBC and criticized its internal controls in 2011, said it was aware of the proceedings by the Geneva prosecutor and was in contact with HSBC about it.
A concern for HSBC is that U.S. authorities could look at re-opening a 2012 deferred prosecution agreement with the bank, which followed a $1.9 billion fine after it was found to have helped move hundreds of millions of dollars in illicit drug money through the U.S. financial system.
The disclosures about the Swiss bank have also caused a political row in Britain over practices at HSBC and whether its tax authority had done enough to pursue suspected wrongdoers.
HSBC’s shares closed up 0.4 percent at 605.5 pence, having slipped 2 percent since the first reports based on the leaks were published 10 days ago.
Chief Executive Stuart Gulliver has said the recent allegations had been “painful.” They are also expected to overshadow HSBC’s annual results on Monday and Gulliver and Chairman Douglas Flint are due to testify to British lawmakers on the Swiss scandal on Feb. 25.
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