Credit Suisse found lacking in fight against money laundering

Not up to scratch, says FINMA of CS’s efforts to run a clean operation © KEYSTONE / WALTER BIERI

Swiss bank Credit Suisse has failed to meet its obligations to prevent money laundering, says Switzerland’s financial watchdog. NGO reaction has been critical.

In two enforcement proceedings against the bank, FINMA, Switzerland’s Financial Market Supervisory AuthorityExternal link, found deficiencies in due diligence measures required to comply with anti-money laundering regulations.

The first misconduct proceeding relates to alleged corruption cases involving FIFA, world football’s governing body, and oil companies Petrobas and PDVSA, between 2006 and 2015, FINMA said on Monday.

Problems centre around the identification of the contracting party, the determination of the beneficial owner, the categorization as a business relationship with increased risk, as well as the necessary clarification of increased risk and its plausibility.

Another case involves a significant business relationship with a politically exposed person (PEP), who remains unnamed.

“The bank was too slow to identify and treat the PEP client as posing increased risks,” FINMA wrote in a statementExternal link. “Moreover, the due diligence and corresponding documentation relating to the business relationship were incomplete.”

Reaction

The response from observers of banking issues in Switzerland was harsh.

Martin Hilti, director of Transparency International SwitzerlandExternal link, welcomed the vigilance of FINMA, but also said that “what is frightening, or worrying, is that even in banks that are ‘too big to fail’, due diligence is not being carried out as required under law.”

This was echoed by Public EyeExternal link’s Marc Guéniat, who said that it was positive that FINMA decided to communicate the details of the affairs publicly, something not always a given.

However, he told swissinfo.ch, the cases in question are “not simple incidents, but rather large affairs, pointing to the existence of quite serious problems within Credit Suisse.”

He also pointed towards the recent phenomenon of banks seeking out new markets in developing countries in order to counter losses brought about by tighter regulation and data-sharing in Europe and the US; in many of these new markets, sanctions and oversight are extremely weak, he said.

Next steps

In the meantime, FINMA has taken measures to improve the anti-money laundering policy and to ensure Credit Suisse implements steps more quickly. An independent representative will review the implementation and impact of the measures.

In connection with the alleged cases of corruption, since 2015 FINMA has been investigating several banks to see whether their clients were involved in these cases and whether the banks complied with the supervisory regulations.

For its part, Credit Suisse saidExternal link that it had “commissioned independent reviews of the conduct in question, self-reported the shortcomings, and has cooperated with FINMA throughout the process, taking proactive remediation measures”.

The bank added that it was “grateful to FINMA for its acknowledgement of the improvements that have been made to our compliance and control framework over the last few years” and pointed out that as a result of the review, FINMA had not “imposed any fine on Credit Suisse, not ordered any disgorgement of profits nor any limitation of business activities.”