Supervisor hopes bank crime wave has peaked

Swiss banks claim to have cleared their vaults of dirty money Keystone

Recent months have witnessed a spate of high-profile criminal probes into money laundering at Swiss banks. But the financial supervisor is quietly optimistic that the high tide mark has been reached thanks to an improved tip-off culture of suspicious transactions.

Just last week, Credit Suisse found itself at the centre of a multinational tax evasion probe of 55,000 suspect accounts spanning five countries. In the last few months, BSI and Falcon banks were punished for their role in the 1MDB Malaysian fund scandal, together with the Swiss branch of Coutts.

Yet more banks are being investigated in relation to 1MDB and others have been implicated in the Petrobras corruption scandal. The list may seem endless, but Mark Branson, head of the Swiss Financial Market Supervisory Authority (Finma), believes that Swiss banking culture is gradually improving.

“Hopefully we will be able to look back on 2016 [when the 1MDB and Petrobras scandals came to light] as a peak in such new cases,” he said at Finma’s annual press conference on Tuesday. Last year Finma investigated 22 money laundering cases compared to 9 in 2015.

Last year, Branson delivered a public warning that too many banks were waiting for scandals to erupt in the media before reporting their suspicions to the authorities. On Tuesday, he said banks are now reporting initial suspicions early rather than waiting for the situation to get out of control.

“We have seen an increase in the number of both mandatory and voluntary reporting. This indicates a culture change as banks take this role more seriously,” Branson said. “We can only fully judge how far they have improved in a few years’ time. But this shows they are moving in the right direction.”

“Money laundering is driven by the client, not the bank, so we can never hope to reduce this activity to zero. But we can strive to eliminate the more serious cases where the banks ignored obvious warning signs.”

Rogue staff?

Figures from the Swiss Money Laundering Reporting Office show a significant increase in tip-offs in 2014 and 2015. Last year’s figures have not yet been published.

Branson would not be drawn on the latest Credit Suisse case beyond saying that Finma is in contact with the bank. Last Friday, Dutch prosecutors coordinated criminal investigations against Credit Suisse that also stretched to Britain, Germany, France and Australia.

In response, Credit Suisse took out a number of newspaper adverts in the British press saying it has “zero tolerance” for harbouring tax cheats or money launderers. The bank pointed out that it has ejected tax cheats from its books, or else forced them to own up to their tax authorities.

This raises the spectre of rogue bank staff hiding misconduct from their managers and compliance officers. Speaking to reporters on Tuesday, Branson said that while it was impossible to eliminate all cases of people “acting creatively” to hide nefarious activities, taking action against individuals sends out the message that “they have something to fear” from such conduct.

Switzerland is the world’s biggest international wealth management centre with around $2.5 trillion in assets, much of it offshore money.