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(Bloomberg) -- The latest probe into Credit Suisse Group AG is a blow, not just for the firm but also for the Swiss attorney-general, who didn’t know some of the bank’s offices were going to be raided. This week, Swiss authorities are back in damage-control mode, after almost a decade of financial scandals spanning Bradley Birkenfeld’s whistle-blowing to the Panama Papers.

Finma, Switzerland’s financial watchdog, hosts its annual press conference at 9:30 a.m. on Tuesday, an event at which Chief Executive Officer Mark Branson will be questioned on what he knew about the March 30 raids in London, Paris and Amsterdam. On Wednesday, Swiss Attorney-General Michael Lauber will be at the center of another media scrum in the Swiss capital, Bern.

Having made two arrests last week, Dutch authorities are probing dozens more people suspected of concealing millions of euros in Swiss bank accounts, while criminal investigations are also under way in France, Germany, the U.K. and Australia. That raises the question whether the raids are a legacy of the untaxed assets accumulated before Swiss banks settled tax-evasion disputes with the U.S. Department of Justice, or a sign of more intractable problems.

“It’s mainly bad for the reputation of the bank and reviving old cliches,” said Daniel Regli, an analyst at Mainfirst in Zurich. “It’s about past business practices, which Credit Suisse already should have abandoned a while ago.”

Zero Tolerance

The Zurich-based bank on Sunday and Monday took out double-page advertisements in newspapers, including The Wall Street Journal, the Financial Times and Le Figaro, stating that “Credit Suisse applies a strict zero-tolerance policy on tax evasion.” In the ads, Credit Suisse said that in 2011 it had asked all clients to prove their tax-compliance.

Iqbal Khan, head of international wealth management at Credit Suisse, said that as far as he knew, the probes target individuals outside the bank and that no assets held at the bank were confiscated. Khan said last week he was surprised by the timing of the raids, coming the day before the introduction of new automatic exchange of information rules. Those regulations are intended to improve data sharing as authorities fight tax evasion. 

Still, perhaps the Swiss shouldn’t have been too surprised. Tax authorities in the Netherlands asked their Swiss counterparts in July 2015 for details of Dutch clients at banks including Credit Suisse. The Dutch request pertained to clients who held non-compliant accounts at Credit Suisse between Feb. 1, 2013 and Dec. 31, 2014, according to a report in Le Matin Dimanche. The bank complied with the request, the newspaper said.

The Swiss attorney-general’s office said in a statement on March 31 it was “astonished” it hadn’t been informed in advance of the raids. The office, which is also working with Singaporean and U.S. prosecutors on probing how more than $3.5 billion was diverted from Malaysia’s 1MDB, said “rules of international cooperation were not followed” in the case. 

Last Chapter

The Dutch investigation is probably “the last chapter” of a “hangover period” that’s the legacy of banking secrecy, said Bill Sharp, a U.S. tax lawyer who specializes in Swiss-American cases.

Credit Suisse was fined $2.6 billion in 2014 after admitting it helped Americans cheat on their tax obligations, and also paid 260 million euros ($277 million) to settle tax probes in Italy and Germany. Another 80 Swiss banks have entered into non-prosecution agreements with the DoJ in return for disclosing details on how their clients evaded taxes, while UBS Group AG paid $780 million in 2009 to settle its own dispute over tax evasion with the U.S. government.

Credit Suisse has reported more than 40 billion francs ($39.9 billion) in outflows since 2011 from clients that moved to become tax compliant, Khan said. While the bank has admitted past wrongdoing in relation to so-called legacy assets, he reiterated its current zero-tolerance of tax cheats.

The Dutch investigation shows cooperation on international law enforcement is working, with the net closing on tax dodgers, said George Turner, a researcher at the Tax Justice Network in London. Last week’s raids were coordinated by Eurojust, the agency that manages judicial cooperation across the 28-member European Union.

“Credit Suisse has been moving away from the old Swiss private bank secrecy model moving onshore in other local markets,” said Barrington Pitt Miller of Janus Capital Management LLC. “So in a sense what the probe shows is their strategy is consistent with the legacy Swiss model not being sustainable in the current environment.”

--With assistance from Stephen Morris and Giles Broom

To contact the reporters on this story: Hugo Miller in Geneva at hugomiller@bloomberg.net, Jan-Henrik Förster in Zurich at jforster20@bloomberg.net, Albertina Torsoli in Geneva at atorsoli@bloomberg.net.

To contact the editors responsible for this story: Vidya Root at vroot@bloomberg.net, Dylan Griffiths, James Kraus

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