The spouse of the diplomat, identified as Madame G, is suspected of passing envelopes, each containing around 200,000 euros in cash, to another woman who was arrested last year in Spain, Radio Télévision Suisse reported on Thursday night.
Madame G., who cannot be identified because of Swiss privacy laws, received the money and passed it on to the other woman, RTS said.
The exchanges of money occurred at various spots, including the Mandarin Oriental and Métropole hotels in Geneva, and a pharmacy in the city, the report said.
In at least one case, it appears that Madame G. received 500 euros for her services.
The wife of the retired ambassador, who is reportedly active in the diamond business, admitted to having transmitted the money when contacted by RTS.
But she denies knowing that she was doing something illegal, her lawyer is quoted as saying.
The lawyer said she naively thought she was providing a service to someone she knew.
The lawyer added that her husband of 20 years, currently on a mission in Africa, was unaware of his wife’s activities.
Spanish police obtained information by intercepting phone calls made by a member of the money-laundering ring to the former ambassador’s wife between December 2011 and March 2012, RTS said.
Reporters from the TV network obtained transcripts of the conversations.
The woman is suspected of being involved in an affair involving a group of Chinese in Spain who are suspected of laundering millions of euros through Geneva banks.
The Spanish police investigation, dubbed “operation Emperador”, has already implicated the HSBC bank in Geneva and Lombard Odier, a Geneva private bank.
Madrid has sought help from Swiss justice authorities, who have requested further information on the subject, RTS reported.
Lombard Odier has issued a statement stating that one of its employees had left the bank following an internal investigation.
The investigation concluded that “a certain number of internal regulations” were violated, the private bank said.
RTS reported this week that an employee suspected at HSBC is no longer working there, information that was not confirmed by the bank.
In a statement, HSBC said an internal investigation was under way and had not yet been concluded.
HSBC said the investigation was initiated as soon as it became aware that one of its employees had been cited in the affair, and was not undertaken at the behest of authorities.