Suisse Secrets Leaks Exposes EDD Shortcomings

Suisse Secrets Leaks Exposes EDD Shortcomings

It is a sign of the times when the largest political grouping in Europe threatens to designate Switzerland a high-risk jurisdiction for financial trading.

A spokesperson for the European People’s Party said information in this week’s data leak (nicknamed the ‘Suisse Secrets’) showed “massive shortcomings of Swiss banks when it comes to the prevention of money laundering”. 

The data revealed details from more than 18,000 accounts, ranging over 70 years from the 1940s to the 2010s. 

The leak claims that Credit Suisse reportedly held $8 billion in assets for a client list that included known criminals, corrupt politicians and individuals with proven associations to torture and drug trafficking.

Credit Suisse now widespread pressures including massive debt problems, regular reviews by the US Inland Revenue Service and legal cases in criminal court.

The mounting issues faced by the bank prove that it pays in the long-term to know your customer, and that Credit Suisse have been neglecting their due diligence responsibilities.

Credit Suisse Response

In response, Credit Suisse “strongly rejects” the “allegations and insinuations” about the business practices exposed by the Suisse Secrets leak, claiming that  90% of accounts implicated are closed today.

In a separate event, Switzerland’s Federal Criminal Court heard this week about events at the bank between 2004 and 2008. Credit Suisse became the first major Swiss bank ever to face criminal charges in the country and the trial is due to continue for the next three weeks.

The court heard that executives were aware of “serious concerns” about members of the Bulgarian mafia depositing “suitcases of cash”, but chose to continue with business as normal despite knowledge of criminality and gang-land assassinations.

A Swiss History

Allegations of Swiss bankers’ purposefully committing illegal acts for high-net worth clients were also famously exposed during the 2008 trial of UBS wealth manager Bradley Birkenfeld.

Those days are changing and the regulators are now consistently issuing fines for companies that found to be  not carrying out “adequate” background checks.

In 2021, the FCA fined Credit Suisse £147.2 million for due diligence failings in relation to loans for the government of Mozambique.

In the case, the FCA found that Credit Suisse “should have appreciated the unacceptable risk of bribery” due to information that was open to executives.

Recent Example

A recent investigation into an individual for AML purposes highlighted the need for thorough KYC screening. The individual had already passed traditional checks with no major concerns and no risks associated with their name.

Our enhanced due diligence investigation uncovered a string of aliases associated to the individual. Further analysis of the aliases identified a long history of criminal activity, including associations with money laundering and a host of other financial crimes.

Evolving Risks

As risk exposure continues to evolve, the regulators now require stronger protection against  potential indicators of fraud. Enhanced  screening using open source intelligence is now strongly recommended and will soon become the standard for due diligence.

For banks like Credit Suisse, embracing open source enhanced due diligence checks can help identify high-risk behaviours and drastically improve KYC efficiencies. Neotas’ advanced technology can even boost AML detection rates by up to 400%.

Our technology rapidly interrogates the largest traditional databases in the world, as well as 100% of public online data. Incorporating real time online data, we provide a more complete picture of customer risk and cover the blind spots in existing CDD practices/processes. 

If the information is out there and isn’t considered as part of EDD processes, it will be hard to build a defensible position to the regulators should a financial institution be investigated. 

As the recent Dear CEO letter by the FCA indicated – financial institutions are now expected to do more, or face the consequences. Isn’t it time that you protected yourself from the regulators?

If you want to discuss due diligence or risk management, our team are here to help. Get in touch or schedule a call here.

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