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Credit Suisse settles €238m money laundering and fraud case with French prosecutors

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Credit Suisse agreed to pay a 238 million settlement to end a French probe surrounding an alleged tax evasion scheme between 2005 and 2012. Under General Counsel Markus Diethelm, the settlement is the latest in a series of proactive moves the bank has made since a recent board overhaul to resolve a litany of legal controversies and negative press. The fines allowed the Swiss financial institution to avoid criminal proceedings.

Probe Findings

The settlement concludes two years of negotiations between the Parquet national financier (PNF) and Credit Suisse. The probe began in 2016 when, according to court documents, a whistleblower denounced an organized system that assisted in tax fraud and money laundering, primarily through the canvassing of French clients by Swiss salespeople. The subsequent investigation by the Financial Judicial Investigation Service (SEJF) revealed 4,999 French nationals who had held cross-border Credit Suisse accounts for up to several decades. The accounts contained 2 billion euros’ worth of concealed funds, without counting additional assets held in other Swiss bank accounts. The clientele appeared to be targeted by a sales team specially dedicated to France. 

According to the report, Credit Suisse representatives traveled to France and pursued the clients discreetly – never meeting on official bank premises, following up with those that didn’t declare their Swiss accounts to discuss “old money,” and often inviting clients to sporting events. Meanwhile, the bank retained most customer documentation and account statements within Swiss borders without delivery to customers, who could nonetheless access the documents at will.

The prosecution construed these findings as evidence of aggravated money laundering and illegal solicitation. Specifically, it alleged that the bank habitually assisted in complex laundering schemes involving placement, concealment, and conversion of funds obtained through tax fraud. The profit from managing the French clients’ accounts was estimated at 65.5 million euros. 

According to Prosecutor Francois-Xavier Dulin, the fine was calculated based on “the systematic character, lengthy period and creation of tools to hide” activity Credit Suisse’s clients wished to conceal. However, the court also considered the bank’s cooperation in the case once the activity had been revealed.

History of Litigation

Credit Suisse has made no admission of guilt and, based on court documents, has attested to having followed applicable laws. Instead, it said the fine represents its desire to turn a new page by resolving outstanding issues. Since 2020, the financial institution has faced at least $4 billion in litigation costs, including those from the 2021 Greensill and Archegos scandals. 

Litigation from Singapore could bring that figure still higher. Bidzina Ivanishvili, former Georgian prime minister, is pursuing litigation connected to the $150 million fraud a Credit Suisse banker committed involving the billionaire’s – and multiple others’ – client accounts. In October 2022, the bank reached a settlement with U.S. regulators over its alleged role in the events leading up to the 2008 financial crisis, and in June 2022 was found guilty in a legacy case involving the laundering of cocaine trafficking proceeds.

The bank’s new CEO, Ulrich Koerner, is restructuring the organization in hopes of rehabilitating the bank’s reputation and stability. The bank is expected to cut costs in an attempt to prevent further scandals while improving its profits.

Key Takeaways: Proactive Risk Management

Credit Suisse has cited an organization-wide failure “to anticipate material risks in good time in order to counter them proactively and to prevent them.” 

It is crucial for firms to proactively connect fraud and money laundering prevention processes – moving from a strategy that merely checks compliance boxes to one truly invested in preemptively detecting, preventing, and reporting violations. Alongside a streamlined organizational structure, artificial intelligence overlays can help organizations better use the tools they already have. 

Yet, for any technology or infrastructure to be effective, firms’ risk assessments must be continually kept up-to-date to ensure the most current trends have been taken into account. Paired with this, rigorous audits can ensure accountability within the organization’s fraud and anti-money laundering processes.

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Originally published October 28, 2022, updated October 31, 2022

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