HSBC’s Swiss private bank is winding down relationships with more than 1,000 ultra-high-net-worth clients across the Middle East after classifying many of them as high risk.
The move follows regulatory findings that the bank failed to apply sufficient anti-money-laundering (AML) checks on high-value accounts, prompting a broader review of its risk management practices, claims Alessa.
The affected clients, spanning Saudi Arabia, Qatar, Lebanon, and Egypt, have already begun receiving closure notices. Some of these accounts reportedly hold assets exceeding $100m, with the offboarding process expected to continue over several months. Swiss supervisors have prohibited HSBC from onboarding any new politically exposed persons (PEPs) until the bank demonstrates compliance improvements and effective risk controls.
This decision stems from an investigation concluded in June 2024, when regulators determined that HSBC had not adequately reviewed more than $300m in high-risk transactions. Authorities found that several red flags went unreported and that some transactions lacked a clear economic rationale. As part of the sanctions, the bank has been placed under independent audit oversight to ensure remediation.
HSBC’s exit highlights a growing regulatory expectation for Swiss private banks to strengthen their due diligence and monitoring frameworks. Institutions are being urged to ensure transparent verification of wealth origins, maintain continuous oversight of high-risk relationships, and implement clear thresholds for exiting client relationships that cannot be effectively de-risked.
The shift also presents an opening for rival private banks in Switzerland and the Gulf, many of which are expanding their operations to attract wealthy clients from the region. However, industry observers note that successfully onboarding these clients will require robust governance standards and rigorous AML frameworks capable of withstanding regulatory scrutiny.
For compliance teams, HSBC’s move serves as a cautionary example of the need for stronger controls across client lifecycle management. Teams should perform enhanced PEP and adverse media checks, corroborate the source of wealth through multiple data points, and increase review frequency for high-risk clients. Additionally, transaction monitoring systems must be fine-tuned to flag suspicious or unexplained transfers, with documented justifications required for any case closures.
Finally, financial institutions are advised to establish formal governance processes for client exits, including clear communication of deadlines and retention procedures. Comprehensive record-keeping of all committee decisions remains essential to demonstrate accountability and regulatory compliance.
Alessa, a provider of AML compliance technology, supports financial institutions in these efforts with automated risk scoring, enhanced due diligence reporting, and continuous monitoring tools. The platform equips compliance teams with the visibility and control needed to manage high-risk relationships confidently and meet tightening regulatory expectations.
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