In a significant move against financial misconduct, Swiss regulator Finma have taken action against Lebanon’s largest bank, Bank Audi, for serious violations related to money laundering. This comes amidst revelations of millions of francs in unaccounted payments to senior political figures, highlighting the intersection of high finance and political corruption. 

Swiss Regulator Finma’s Investigation and Sanctions Against Bank Audi

The Swiss market regulator, Finma, initiated an investigation into Bank Audi, focusing on its Swiss subsidiary, Banque Audi. The inquiry was part of a broader effort to scrutinise Riad Salameh, Lebanon’s former central bank governor, amidst allegations of embezzling over $330 million in public funds. Salameh, who faces charges in Beirut and is under investigation in multiple jurisdictions including Switzerland, France, and Germany, has denied all allegations. 

Finma’s probe revealed that Banque Audi had engaged in transactions that raised significant red flags for money laundering. Consequently, the bank has been ordered to return 4 million Swiss francs in “illegally generated” profits and to bolster its capital by an additional 19 million francs. Additionally, for the next two years, Banque Audi is prohibited from initiating new relationships with politically exposed persons and other high-risk clients. 

The Deep-Rooted Issues 

The investigation laid bare the systemic failings within Banque Audi, including the suppression of internal audit findings and repeated failures to report suspicious transactions. One illustrative case involved a large payment from a Lebanese politically exposed person to a high-ranking official’s Swiss account, with the bank failing to secure a satisfactory explanation for the transaction. 

Ties to Political Elites 

Bank Audi’s connections to Lebanon’s political elite have been longstanding. Founded by Raymond Audi, who served as a government minister while chairing the bank, its board and major shareholders include several politically exposed individuals and members of the ruling families from the United Arab Emirates and Kuwait. 

Lebanon’s Economic Crisis 

This scandal emerges against the backdrop of Lebanon’s debilitating economic crisis, characterised by widespread poverty and a staggering devaluation of the Lebanese currency. More than three-quarters of the population is now impoverished, as the country grapples with the fallout from years of corruption and financial mismanagement. 

Moving Forward 

As Banque Audi commits to internal reforms, the broader implications of this case underscore the urgent need for robust financial oversight and accountability, especially in regions marred by political and economic instability. The actions taken by Swiss authorities not only aim to address the specific failings of Bank Audi but also signal a broader commitment to combating money laundering and financial crimes on the global stage. 

The case serves as a stark reminder to all businesses within the financial sector about the importance of having effective AML procedures in place to ensure situations like this don’t arise. With regulators across a variety of sectors clamping down on AML and compliance failings, its essential businesses are regularly monitoring and updating their procedures. 

Reminder Served to Legal Businesses  

As well as a clear reminder to financial sector businesses, this case should also alert law firms, solicitors and conveyancers about the importance of having effective AML and compliance measures especially when completing client due diligence.  

Verify 365 enables lawyers, solicitors and conveyancers to complete fast, compliant identity checks to ensure they are practicing with the regulatory guidelines and identifying a client or business. With innovative tools and features that tackle the AML and KYC challenges, Verify 365 enables you to streamline your processes and focus on core legal work and enhance the overall experience of your client.  

Verify 365 risk & compliance platform distinguishes itself with its innovative approach to client verification through “Lite” checks, which provide dashboard-based, quick AML verifications, and “Enhanced” Client Due Diligence (CDD), the comprehensive AML suite. The Enhanced CDD checks include biometric/NFC ID verification, address validation, politically exposed persons (PEPs) and sanctions and adverse media checks, and FCA-regulated Open Banking source of funds checks (4000 banks) along with sophisticated financial analytics. This enables law firms to conduct exhaustive and compliant AML and client due diligence swiftly and efficiently.

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