Banks have learned nothing from their mistakes: TI on Credit Suisse leaks

The Suisse Secrets investigations – released on Monday by the Organized Crime and Corruption Reporting Project (OCCRP), Süddeutsche Zeitung, The Guardian and 45 other media outlets – reveal previously unknown breaches, dubious clients and volume of dirty money recycled by Credit Suisse , one of Switzerland's largest banks.

After yet another massive bank scandal, it is time for governments around the world to take decisive action against these professional enablers of financial crime, observed Transparency International (TI).

The anti-graft watchdog, in a press release, said that the leaked confidential documents show that Credit Suisse banked with high-risk clients – for years – despite significant red flags. This continued even after the bank pledged to crack down on shady money. 

Journalists have identified dozens of dodgy customers – including politically exposed people – from around the world, starting from the 1940s and leading up to the past decade. Credit Suisse rejected allegations and said it had taken all the appropriate steps in relation to flagged accounts, but journalists' findings suggest otherwise, added the TI release.

For example, the investigations reveal that the bank stored $273 million for Venezuelans accused of funnelling money away from the state oil firm Petroleos de Venezuela, S.A. (PDVSA). 

Their accounts were reportedly kept open even after some pleaded guilty on counts of corruption. Venezuela faces financial collapse after widespread looting of state coffers. Over the past decade, the country significantly declined on Transparency International's Corruption Perceptions Index and in 2021 received one of the world's lowest scores.

Disturbingly, an additional investigation by OCCRP exposes the bank's continued promotion of secrecy to attract customers with suspicious funds. Specifically, the bank suggested ways to help a purported African investor remain anonymous – including through offering complex corporate structures and assuring of utmost privacy, even inside the bank – instead of asking the necessary questions to block dirty money.

TIB said that the leaked documents provide an insight into the prevailing culture at one of the world's biggest and most resourced banks. The payment of fines to help clients who evade taxes or hide laundered money are seen as simply the cost of doing business. This is a culture that disempowers compliance, encourages reckless risk-taking, and breeds the ground for money laundering and corruption.

Back in 2020, the FinCEN Files investigations by the International Consortium of Investigative Journalists (ICIJ) and other media outlets showed that banks, including Credit Suisse delayed submitting suspicious activity reports to US authorities. In doing so, they seemingly often waited until the customers' involvement in corruption or money laundering was reported elsewhere.

Meanwhile, addressing the latest developments, Maíra Martini, anti-money laundering expert at Transparency International (TI), said: "The Suisse Secrets investigations prove once again that banks cannot be trusted to police themselves. The public is tired of hearing about how banks help corrupt officials from around the world launder their money – and how they will do better next time. 

Data leak at Credit Suisse unmasks global corruption and crime

"Whistleblowers and journalists do valiant work to report on such violations, but waiting every six months for the next drop of incriminating papers is not effective practice. Instead, the authorities should be promptly detecting and preventing recurrence of money laundering. A slap on the wrist when banks' repeated offenses are uncovered is not enough."

"As a global community, we need to clamp down on banks that serve corrupt interests, keeping their outsized influence on political decision-making in check. Global leaders need to end the abuse of the financial system and rethink approaches to supervision and enforcement," she added.

In wake of the revelations, TI has called for:

Central beneficial ownership registers with verified information: In many countries, authorities rely on banks to identify those with controlling influences over anonymous companies. As Suisse Secrets demonstrate, this is a very flawed approach. Transparency International is calling for central registers with verified information to become mandatory as part of the ongoing review of the global standard on beneficial ownership transparency. In October 2021, the Financial Action Task Force (FATF) proposed amendments to support such measures worldwide. FATF's 39 members are expected to vote on and decide what the new standard will look like during their next plenary meeting which kicks off tomorrow, 21 February.

Active supervision mechanisms: Banks are the financial system's gatekeepers – and they are not doing their jobs. National supervisory authorities need to ramp up their efforts so we don't have to rely only on courageous whistleblowers and leaks to learn the truth. Assessments should be regular and not just punitive after a scandal is already public. Governments have previously pledged to close this door to dirty money but resourcing on national supervisory and law enforcement authorities remains a problem.

Dissuasive sanctions for banks and senior managers: Bank executives have little incentive to check high-risk clients and say no to dirty money as long as they do not face effective and dissuasive sanctions. Punitive action against individual bankers is also rare, especially those at the top who establish and maintain cultures in support of dirty money.

Strategic intelligence work: The Common Reporting Standard (CRS), which more than 100 countries participate in, requires banks to identify non-resident clients and report them to their local tax administrations. The use of the information collected under CRS should be expanded to tackle corruption and money laundering, and information should be shared with relevant competent authorities in other countries. In addition, Transparency International calls for bank account registers with beneficial ownership data that can be directly accessed by competent authorities and for improved exchange of information on cross-border payments.