It’s a familiar story: A major financial institution alleged to have engaged in business dealings with some of the most notorious criminals in the world incentivized by a take-risks-at-all-cost work culture in the name of maximizing profits.
The latest example came Sunday, when the Organized Crime and Corruption Reporting Project (OCCRP), in partnership with German newspaper Süddeutsche Zeitung (the same media outlet to obtain the “Panama Papers” in 2016), published “Suisse Secrets.” A consortium of more than 160 journalists from 48 outlets spent months parsing through the leaked records of more than 18,000 Credit Suisse accounts, “the largest leak ever from a major Swiss bank.”
The journalists found dozens of accounts belonging to corrupt politicians, criminals, spies, dictators, and other dubious characters, representing “just a small subset of the bank’s overall holdings.”
More than $8 billion in assets held by Credit Suisse were linked to individuals, including “a Yemeni spy chief implicated in torture; the sons of an Azerbaijani strongman who rules a mountainous territory as his own private fiefdom; and bureaucrats accused of looting Venezuela’s oil wealth and hastening its descent into humanitarian crisis,” according to the OCCRP’s analysis.
Toxic compliance culture: The circumstances surrounding Credit Suisse as analyzed in the report highlight how not to operate a compliance program in the financial services industry. According to the accounts of more than a dozen former and current Credit Suisse employees interviewed by the consortium of journalists, among the most concerning compliance practices included:
- Tying bonuses to how much “new money” employees netted;
- Weaknesses in compliance training concerning Swiss bank secrecy laws;
- Engaging in thorough due diligence of small-dollar customers and accounts—for example, at the $1 million level—but not for “ultra-rich” accounts; and
- Keeping secret “very big accounts,” the owners of which allegedly were known by only a few senior executives.
As one former employee told the OCCRP, “When someone wants to engage in money laundering after he loots assets of the country, for example, he needs to transfer the money. So, holders of big accounts go directly to the very senior managers.”
The timing of the report comes while Credit Suisse is facing the first criminal case ever launched against a major Swiss bank in Switzerland. In the case, Credit Suisse is alleged to have allowed a Bulgarian drug trafficking gang to launder around 146 million Swiss francs (U.S. $158 million) through accounts at the bank between 2004 and 2008.
Less than six months ago, Credit Suisse touted sweeping reforms to its long-term growth strategy, reemphasizing risk management after it missed red flags that led to billions of dollars in losses related to the collapses of Archegos Capital Management and Greensill Capital early in 2021.
Credit Suisse responds: In response to the OCCRP report, Credit Suisse said in a public statement it “strongly rejects the allegations and insinuations about the bank’s purported business practices. The matters presented are predominantly historical, in some cases dating back as far as the 1940s, and the accounts of these matters are based on partial, inaccurate, or selective information taken out of context, resulting in tendentious interpretations of the bank’s business conduct.”
The bank continued, “While, as a matter of law, Credit Suisse cannot comment on potential client relationships, we can confirm that actions have been taken in line with applicable policies and regulatory requirements at the relevant times and that related issues have already been addressed.”
Credit Suisse said approximately 90 percent of the reviewed accounts are either already closed “or were in the process of closure prior to receipt of the press inquiries, of which over 60 percent were closed before 2015.”
The bank also said it is “comfortable that appropriate due diligence, reviews, and other control-related steps were taken in line with our current framework” related to the remaining active accounts, and that it “will continue to analyze the matters and take additional steps if necessary.”
The bank stood by the investments it has made in combating financial crime. “Across the bank, Credit Suisse continues to strengthen its compliance and control framework, and as we have made clear, our strategy puts risk management at the very core of our business,” the bank said.