Credit Suisse Censured By FINMA For Lax Anti-Money Laundering Processes

Credit Suisse has been censured by FINMA, the Swiss financial supervisor, for weak anti-money laundering processes, reported Financial Times.

According to the report, the government watchdog found weaknesses at Credit Suisse in several corruption scandals, such as the ones surrounding FIFA (the world football association), Petrobras (the Brazilian oil company) and PDVSA (the Venezuelan oil company). FINMA is demanding that Credit Suisse take steps to improve its policies, and that those improvements are monitored by a third party. The regulator doesn’t have the power to slap Credit Suisse with fines, noted the report.

The bank told Financial Times that FINMA’s conclusions were based on “legacy cases” and that it has launched its own review of the incidents. Credit Suisse said it has cooperated with FINMA through the process, while at the same time is taking proactive remediation measures. FINMA, according to the report, has been looking at banks in relation to the corruption at FIFA, Petrobras and PDVSA.

At Credit Suisse, the government financial watchdog looked at the period from 2006 to 2016 and identified shortcomings in confirming clients, determining beneficial owners and categorizing riskier business relationships in the bank’s documentation, noted the report. “The identified shortcomings occurred repeatedly over a number of years, mainly before 2014,” FINMA said.

FINMA also said the bank didn’t record or monitor risks arising from a business relationship with a person who was politically exposed, and the client has now been criminally convicted. The watchdog didn’t name the people involved in the case, but a person familiar with the matter told Financial Times that FINMA was referring to Patrice Lescaudron, a former Credit Suisse client adviser. Lescaudron was found guilty in Geneva court earlier in the year for taking advantage of clients, including Bidzina Ivanishvili, a former prime minister of Georgia. FINMA said the manager violated the bank’s compliance regulations several times over the past few years.

“However, instead of disciplining the client manager promptly and proportionately, the bank rewarded him with high payments and positive employee assessments. The supervision of the relationship manager was inadequate due to this special status,” the regulator said, according to the report.