Compliance Learnings from the Suisse Secrets leak

What’s happened?

On 20 February 2022, a leak broke the news that Credit Suisse knowingly managed hundreds of millions of dollars for alleged war criminals, corrupt autocrats and drug dealers. The Swiss bank maintained that the allegations were false. The leaks have been dubbed the ‘Suisse Secrets’.

Credit Suisse's clients included the family of an Egyptian intelligence chief who oversaw the torture of terrorism suspects for the CIA; an Italian accused of laundering criminal funds for the infamous 'Ndrangheta criminal group; a German executive who bribed Nigerian officials for telecoms contracts; and Jordan's King Abdullah II, who held a single account worth 230 million Swiss francs ($223 million) at its peak, even as his country received billions in foreign aid.

Lessons to be learned

Firms are required to establish, implement and maintain risk-based controls to mitigate the risks of money laundering and terrorist financing. They’re also obliged to ensure that remuneration arrangements are reasonable and do not incentivise bad behaviours. Failing on either of these fronts can prove extremely costly, if not fatal to smaller players.

The Suisse Secrets leak a textbook case of managing compliance poorly. Interviews with insiders at the bank described a largely toxic corporate culture that incentivised taking on risk to maximise profits. Bonuses were dependent mostly on client account revenues and plausible deniability was reported to be the norm.

“The bank has a clear duty to ensure that the funds it handles have clear and legitimate provenance. People should not have access to the system if what they are carrying is corrupt money.” - Graham Barrow, Dark Money Files.

Key lessons to take from the Suisse Secrets saga are:

• Ensure that any remuneration and bonus structures are appropriate and based on business rather than individual performance
• Make sure that high-risk accounts are scrutinised effectively. If the risks associated with those accounts cannot be effectively mitigated, consider offboarding them. The risk of regulatory censure and reputational damage is simply not worth it
• Periodically review your risk management framework concerning politically exposed persons (PEPs)

“The irony is that Switzerland has become the place for dirty money to go because it is pure, well-managed and reliable.”  - James Henry, Tax Justice Network.

The irony is also that the UK, a global financial centre, is also considered well-managed and reliable. Let’s hope that recent legislative moves to close in on financial crime and dirty money are fruitful.

What's next?

With FCA fines at an all-time high and the volume and publicity given to leaks on the rise, it pays to be prepared. Should you require expert advice, audit and guidance on your firm’s financial crime systems, contact our team today.