Credit Suisse: Major Data Leak Reveals Due Diligence Failures and ‘Ingrained’ Compliance Culture

The latest set of explosive revelations concerning bank accounts of the rich and powerful has seen Switzerland’s second largest bank, Credit Suisse, face accusations of widespread, systemic failures of due diligence.

Suisse Secrets is an international investigation – involving more than 160 journalists in 39 countries – into bank account information leaked from Credit Suisse, one of the world’s wealthiest and most important banks. 

Data provided to German newspaper Süddeutsche Zeitung by an anonymous source in 2021 has led to an investigation into more than 18,000 accounts, holding in excess of 100bn Swiss Francs. Many of these accounts were opened by criminals, corrupt politicians and drug traffickers, including a Serbian securities fraudster and a German client convicted of bribery, according to Suisse Secrets.

One Vatican-owned account in the data was used to spend €350m in an allegedly fraudulent investment in London property that is at the center of an ongoing criminal trial of several defendants, the UK’s Guardian newspaper reported.

Journalists spent months interviewing insiders and checking the data against other sources, before releasing findings through media outlets globally.

Latest Revelations

This is the latest in a string of leaks in recent years, including the Pandora Papers in 2021, which saw the release of more than 11.9 million confidential files exposing the wealth and offshore dealings of powerful individuals. In 2016, the landmark Panama Papers investigation led to police raids and the fall of prime ministers in Iceland and Pakistan, and helped drive new anti-money laundering laws (AML) in the EU. 

While in 2017, the Paradise Papers highlighted countries where laws enable ultimate beneficial owners (UBOs) to be hidden, and how wealthy individuals are exploiting shell company structures. And the 2020 FinCEN files leak exposed financial institutions that had been complicit in the movement of trillions in illicit funds.

This latest investigation, into Credit Suisse accounts, addresses not only areas of failure at the bank, but also highlights persistent concerns about the Swiss banking system and its secrecy laws. Introduced in 1934, these criminalized the disclosure of client banking information to foreign authorities. 

Journalists noted that many of the clients exposed in the data were from countries that do not use the Common Reporting Standard (CRS), which requires countries to automatically exchange banking information with tax authorities. 

Switzerland signed up to CRS in 2014 and its banks started sharing information in 2018. However, Switzerland’s banking secrecy law remains in force and was broadened in 2015 to theoretically be applicable to any third party who “reveals” or “exploits” a secret that has come from within a Swiss bank.

Credit Suisse says that Switzerland’s strict banking secrecy laws prevent it from commenting on claims relating to individual clients.

Compliance Culture at Credit Suisse

A former Credit Suisse employee told the Organized Crime and Corruption Reporting Project that a deeply ingrained culture in Swiss banking was to ignore problematic clients. “The bank’s compliance departments [were] masters of plausible deniability,” they said. 

“Never write anything down that could expose an account that is non-compliant and never ask a question you do not want to know the answer to.”

In a statement, the bank said it strongly rejected allegations about its business practices. “The matters presented are predominantly historical, in some cases dating back as far as the 1960s, including at a time where laws, practices and expectations of financial institutions were very different from where they are now. Furthermore, the accounts of these matters are based on partial, selective information taken out of context,” it said.

While Credit Suisse has claimed an overwhelming majority of the reviewed accounts were closed or in the process of closure, the Guardian reports that more than two thirds of the accounts were opened since 2000, and a portion remain open today. 

Ongoing Troubles 

In February, Credit Suisse became the first major Swiss bank to face criminal charges – which it denies. A Swiss court was told that millions of Euros were paid out of accounts related to a Bulgarian wrestler at the center of an international drugs probe between 2004-2008, despite the bank’s compliance department being alerted. 

“I think at that time, money laundering as a crime was something relatively new,” a former Credit Suisse banker told the court. 

In 2021, the bank was involved in the collapse of supply chain finance firm Greensill Capital and US hedge fund Archegos Capital, and was fined $475m over its role in a loan scandal in Mozambique. In total, the Guardian reports Credit Suisse has racked up more than $4.2bn in fines or settlements over the past three decades.

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