The banking major has come under the scanner after a global expose earlier this month by a grouping of investigative journalists disclosed details of over one lakh account holders in HSBC Geneva branch.
This included 1,195 Indian names, including those of big corporates and political leaders.
The Swiss prosecutors are probing HSBC Private Bank as well as unknown persons for "suspected aggravated money laundering" activities.
"Following the recent revelations related to the HSBC Private Bank (Switzerland), the public prosecutor announces the opening of a criminal procedure against the bank... for aggravated money laundering," the Swiss Prosecutors Office said in a statement.
The investigation comes against the backdrop of allegations that the bank might have helped wealthy customers to evade tax.
According to prosecutors, the probe could be broadened to others depending on the progress in the case.
The expose claimed that HSBC's Swiss private banking arm aided customers, spread across more than 200 countries, to evade taxes on amounts worth over USD 119 billion.
Names of businessmen, celebrities and political figures, among others, are part of the leaked list.
HSBC, which admitted to some past lapses on its part, recently came out with full-page advertisements in papers with an apology over the claims.
The list has 1,668 Indians, while the number of actionable cases stands at 1,195 after taking into account duplication and some other factors. Collectively, these accounts had a balance of USD 4.1 billion (Rs 25,420 crore) till 2007. However, all of those accounts may not necessarily have had illicit funds.