HSBC’s Swiss private bank is offboarding more than 1,000 Middle Eastern clients after classifying many as high risk, a decision reported by news outlets. The move follows findings from regulators that the bank failed to apply adequate anti-money-laundering checks. Closure notices have already gone out to accounts, some of which hold over $100 million in assets, with a winding-down period expected to last several months as reported here.
Key takeaways
- More than 1,000 wealthy clients across Saudi Arabia, Qatar, Lebanon, and Egypt will be affected by the offboarding program.
- Supervisors have prohibited the bank from taking on new politically exposed persons until reforms are verified.
- Prior reviews found weak due diligence on high-risk accounts, including unexplained large transfers.
- Rival banks in Switzerland may attempt to attract the departing clients as they expand Gulf operations.
Why the move matters
The offboarding program illustrates how Swiss private banks should be tightening controls. Institutions need:
- Documented verification of wealth origins.
- Continuous monitoring of high-risk relationships.
- Clear triggers for when to exit a relationship if risk cannot be mitigated, as outlined by regulators.
Regulatory background
In June 2024, authorities concluded that the bank had failed to review more than $300 million in high-risk transactions. These transactions lacked adequate explanation, and red flags were not escalated. The ruling also banned onboarding of new PEPs and placed the bank under independent audit oversight.
Market effects
The exit of these clients has created an opportunity for competitors expanding in the Gulf. However, gaining their business will require strong governance standards and well-documented onboarding and continuous monitoring practices.
Lessons for compliance teams
Onboarding and reviews
- Perform PEP and adverse media checks with escalation paths.
- Collect multi-source evidence of source of wealth.
- Increase review frequency for complex, high-risk clients.
Monitoring and investigations
- Tune systems to catch suspicious transfers that lack clear purpose.
- Require documented justifications for case closures.
- Track reporting timelines as operational KPIs.
Exit and retention
- Define clear thresholds for when to remediate or exit.
- Provide structured client communication for deadlines.
Keep detailed records of all committee decisions. HSBC’s offboarding underscores a growing reality: regulators expect banks to prove not only that they can identify risk but that they can act decisively when it cannot be mitigated. The next step for compliance teams is to strengthen monitoring frameworks, test escalation processes, and ensure that governance committees have the information they need to make timely exit decisions.
Alessa supports these efforts with automated risk scoring, enhanced due diligence reporting, and continuous monitoring tools. We give compliance teams the visibility and control needed to manage high-risk relationships confidently and meet regulatory expectations.
Alessa