Major Credit Suisse leak sets Swiss banking sector at blacklist risk
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Switzerland's second-largest bank could be the cause behind the breakdown of Switzerland's financial sector, if measures were to be taken against it.
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Credit Suisse. (Getty Images)
A huge Credit Suisse leak threatened to damage Switzerland's financial sector on Monday after the European parliament's biggest group, the European People's Party, suggested adding the country to a blacklist for money laundering.
Read more: Credit Suisse exposed over 30,000 bank clients details leak
The EPP called on the European Union to review its relationship with Switzerland.
This move, according to experts, would be disastrous to Bern's financial sector.
“When Swiss banks fail to apply international anti-money-laundering standards properly, Switzerland itself becomes a high-risk jurisdiction,” said Markus Ferber, the coordinator on economic affairs for the EPP.
“When the list of high-risk third countries in the area of money laundering is up for revision the next time, the European Commission needs to consider adding Switzerland to that list.”
After major newspapers, such as The Guardian, Le Monde and the Organized Crime and Corruption Reporting Project (OCCRP) revealed the bombshell, the EPP released the proposal.
The leak, which is an investigation called Suisse Secrets, recognized clients which have had involvement in torture, drug trafficking, money laundering, corruption, and more serious crimes.
“Bank privacy laws must not become a pretext to facilitate money laundering and tax evasion. The Suisse secrets findings point to massive shortcomings of Swiss banks when it comes to the prevention of money laundering,” Ferber said. “Apparently, Credit Suisse has a policy of looking the other way instead of asking difficult questions.”
The coordinator made a connection between the scandal and Europe: Given the close affiliation and ties that the EU has with the Swiss banking sector, this entails that anti-money-laundering deficiencies in the industry are problematic to the European financial sector as a whole.
In response to the leaks, Credit Suisse said it “strongly rejects” the allegations, and that the information selected was largely “taken out of context.”
Furthermore, the Swiss bank also set up an internal task force to look into the leak, saying “We have robust data protection and data leakage prevention controls in place to protect our clients.”
If the country were to be added to the blacklist, this would mean that bankers, lawyers and accountants will be required to go through extra auditing regarding any transaction or commercial relationship with people and companies in Switzerland.
The information was anonymously leaked to Süddeutsche Zeitung.
Upon the publicization of the information, politicians and media outlets exhibited anger, notably that investigative journalists were prohibited from delving into the Suisse secrets investigation due to the country’s banking laws, notoriously known for their secrecy and privacy.
Banking laws in Switzerland criminalize the disclosure of banking information by financial professionals. In the past years, these laws further prohibited investigative journalists from receiving banking data.
Andrea Caroni, a Swiss politician, said that “maybe the rules are not set perfectly.” Caroni in 2015 introduced measures of extreme secrecy in the banking sector, and said that he may consider a review.
The Swiss Green Party, though, suggested immediate reform of article 47.
“The Suisse Secrets show once again that Swiss banks continue to do business with dictators, autocrats and criminals,” the party said in a statement. “With a proposal submitted today, the Greens are now campaigning for an immediate revision of the Banking Act.”
Read more: The Pandora Papers: Lifting the Lid on the World's Hidden Wealth
The leak
A data leak from Credit Suisse, Switzerland's second-largest bank, revealed details of more than 30,000 accounts according to a German newspaper and other media on Sunday, pointing to apparent failures of due diligence in checks on many customers.
The newspaper said it analyzed the data alongside the Organized Crime and Corruption Reporting Project and dozens of media partners, including The New York Times and The Guardian, from the 1940s until well into the last decade.
According to the report, the bank has accepted customers who are "corrupt autocrats, suspected war criminals, and human traffickers, drug dealers, and other criminals."
A human trafficker convicted in the Philippines, a Hong Kong stock exchange chairman imprisoned for bribery, and an Egyptian billionaire who ordered the assassination of his Lebanese pop star girlfriend are among those exposed.
A former Siemens manager was listed as having six accounts after being convicted of bribery in 2008.
One of the former Siemens executives' accounts had assets worth more than 54 million Swiss francs (about $58.54 million) in 2006, according to the publication, which cannot be attributed to his Siemens income.
The revelation also discloses the hidden accounts of Jordan's King Abdullah II, Iraq's former Deputy Prime Minister Ayad Allawi, Algerian ex-President Abdelaziz Bouteflika, and Armenia's ex-President Armen Sarkissian.
