A Swiss financial regulator has found that a subsidiary of one of Lebanon's largest banks, which has been investigated over its ties to Lebanon's former central bank governor Riad Salameh, did not do enough to prevent money laundering.
Banque Audi (Suisse) SA, a subsidiary of Bank Audi Group, one of the largest lenders in Lebanon, “breached its obligations in the prevention of money laundering” and “seriously violated financial market law”, Swiss financial regulator Finma said on Monday.
The bank is one of several suspected of sheltering hundreds of millions of dollars allegedly embezzled from the Lebanese economy by Mr Salameh, who is being investigated in Lebanon and at least five European countries.
France and Germany have issued warrants for his arrest as part of their investigations while the US and the UK have imposed sanctions on him for “abusing his position of power”.
Monday's findings conclude a 2022 enforcement proceeding initiated by Finma that was launched after an on-site inspection in 2021 uncovered significant deficiencies in the bank's anti-money laundering measures.
“Finma carried out investigations at over a dozen banks and opened enforcement proceedings in two cases in the Lebanon context,” Finma spokeswoman Patrizia Bickel told The National. “The proceeding against Banque Audi, which has now been concluded, is one of them.”
Finma claimed the bank had not adequately “clarified the origin of assets in high-risk client” and failed to report suspicious transactions to the Money Laundering Reporting Office in Switzerland.
“In doing so, the bank was in serious violation of anti-money laundering regulations,” the agency said.
In the Banque Audi case, Finma ordered the confiscation of 3.9 million Swiss francs ($4.3 million) in profit and a capital surcharge of 19 million francs.
“In the course of the proceedings, the bank has co-operated with Finma and took measures to restore compliance with the law,” the regulator said.
The bank did not respond to The National's request for comment.
How Lebanon's central bank governor allegedly embezzled millions
'Unprecedented' measures
Finma said it reviewed Banque Audi's relationships with politically exposed people from various countries, but declined to comment on those involved.
In some cases, “there were press articles referring to the possibly unlawfully acquired assets of these persons”, the agency simply said.
In 2022, seven Swiss and Lebanese groups lodged a complaint to Finma requesting an investigation into several banks tied to Mr Salameh. The banks in question included Banque Audi.
The groups allege that Bank Audi, Zurich-based Julius Baer and BankMed Suisse, the Swiss subsidiary of another Lebanese bank, helped the embattled former bank governor to shelter millions of dollars in embezzled funds.
Mr Salameh is alleged to have embezzled more than $330 million from Lebanon's central bank through a contract awarded in 2002 to Forry Associates Ltd, his brother's company.
Judicial documents show a significant portion of the money allegedly diverted from the central bank was transferred to banking institutions in Switzerland to finance the acquisition of luxury properties in Europe.
The Swiss public prosecutor, which has opened an investigation into Mr Salameh over allegations of money laundering, is looking into Banque Audi for its involvement in a suspicious transfer of $153 million in treasury bonds by the former central bank chief.
“The Finma measures are definitely related to our complaint,” Zena Wakim, a lawyer and president of Swiss foundation Accountability Now.
“The severity of the measures taken by Finma is unprecedented, asset confiscation remains an exceptional measure and we hope that the leaders of these banks are now personally held accountable for facilitating this widespread corruption. We continue our fight against impunity outside of Lebanon.”
Lawyer Fouad Debs of the Depositors’ Union, one of the Lebanese plaintiffs that asked Finma to investigate the banks, told The National the move was “a step in the right direction”.
“It shows that Lebanese banks have not been always compliant in terms of money laundering and that they have been complicit in money laundering, which they've always denied,” he said.
Despite the ruling, he expects little change within Lebanon.
“Lebanese banking regulatory bodies, the judicial system, the security apparatus – all are under the control of the ruling class. This means that nothing will move forward here,” he said.
