Swiss regulator starts legal proceedings against two banks linked to Riad Salameh

Financial Market Supervisory Authority confirms initiating action 'in the context of Lebanon'

Riad Salameh, next to gold held at the central bank in Beirut. Reuters

Switzerland's financial regulator has initiated legal proceedings against two Swiss-based banks following complaints about alleged money-laundering related to Lebanon's central bank governor Riad Salameh.

The action follows a complaint filed last year by seven Swiss and Lebanese groups to the Financial Market Supervisory Authority (Finma) requesting an investigation into banks tied to Mr Salameh.

Accountability Now, one of the Swiss groups, said on Sunday that following their complaint against “Bank Audi, BankMed, HSBC and Julius Baer, proceedings have been officially initiated in Switzerland against two banks who supported suspected money laundering of corruption by Lebanese PEPs [politically exposed people]”.

The groups allege that Zurich-based Julius Baer and the Swiss subsidiaries of two Lebanese banks, Bank Audi and BankMed, helped Mr Salameh shelter embezzled funds.

“This new development is directly linked to our complaint,” said lawyer Fouad Debs of the Depositors’ Union, which is among the Lebanese plaintiffs.

“Our priority is to push legal cases in Lebanon, but the local judiciary has so far not done its job in terms of holding people accountable. In the meantime, legal proceedings are moving forward abroad.”

Mr Salameh, who has headed Lebanon's central bank since 1993, has been under investigation in at least six European countries since 2020 over alleged financial wrongdoing and corruption.

The Swiss regulator confirmed to The National that it had opened legal proceedings against Swiss banks “in the context of Lebanon”, but did not reveal their names.

“Finma carried out investigations at approximately a dozen banks. In two cases, Finma opened enforcement proceedings”, spokesman Mathys Vinzenz said in an email.

He said the regulator had been in contact “with national and international authorities”.

“Finma always follows up on any indications of risks, weaknesses, or misconduct on the part of supervised entities. This also applies in particular to the due diligence provisions in the context of combating money laundering”, he said.

'Embezzled' millions held in Swiss banks

Riad Salameh is alleged to have embezzled more than $330 million from Lebanon's central bank through a contract awarded in 2002 to Forry, his brother's company.

Investigators allege that Forry was a vehicle designed to siphon millions from the central bank by collecting commissions without providing any actual services in exchange.

Judicial documents reveal that a sizeable chunk of the money was transferred to banking institutions in Switzerland to fund the purchase of luxury properties in Europe.

Investigators tracked the money from an account at the bank in Lebanon, where the commissions were paid, to Forry’s account in Switzerland owned by Raja Salameh, the governor's brother.

Raja Salameh's personal account with HSBC's subsidiary in Geneva allegedly received more than $250 million of the sum.

SonntagsZeitung reported on Sunday that 12 Swiss banks received up to $500 million that the central bank governor is alleged to have embezzled.

The Swiss weekly said that some of the funds had already been frozen but federal prosecutors have yet to reveal how much.

A Lebanese judge filed new charges against Mr Salameh and his brother Raja, along with former assistant Marianne Hoayek, on Thursday, accusing them of embezzling public funds and money laundering.

Riad Salameh denies all accusations against him.

Lebanon opened an investigation into Riad Salameh's assets in 2021, after a request for assistance from Switzerland's public prosecutor, who was probing more than $300 million in fund movements by the bank governor and his brother.