Swiss watchdog criticises Credit Suisse over Fifa money laundering

Credit Suisse showed serious "deficiencies" in its efforts to prevent money laundering when dealing with Fifa, Brazilian oil giant Petrobras and Venezuela's state energy company, Switzerland's financial watchdog said on Monday.

Swiss watchdog criticises Credit Suisse over Fifa money laundering
FINMA did not fine Credit Suisse and praised it for cooperating with the probe. File photo: AFP

Swiss regulator FINMA announced the findings following an investigation that looked at Credit Suisse's conduct from 2006 to 2016. 

In addition to shortcomings regarding FIFA and the two oil firms, the probe also blasted Credit Suisse for shortcomings in its oversight of a high-profile money manager who exposed clients to excessive risk.

The money manager was not named in the probe, but the Bloomberg news agency has identified him as Patrice Lescaudron, who was sentenced to five years in prison in February by a Geneva court over a raft of illegal trades. 

In a statement, Credit Suisse acknowledged FINMA's findings but stressed that most of the purported missteps occurred before 2014 and that the bank has since taken measures to beef up its compliance systems. 

FIFA in 2015 became engulfed in a massive corruption scandal that uncovered hundreds of millions of dollars in graft spanning multiple continents. 

FINMA said it launched an investigation that year to uncover the extent to which Swiss banks and their clients were involved in the corruption within Zurich-based FIFA.

When dealing with FIFA, Credit Suisse did not do enough to properly identify its clients, determine the real beneficiary of accounts or identify business relationships that posed an “increased risk,” FINMA said. 

While the investigations into the bank's dealings with scandal-marred Petrobras and Venezuela's PDVSA were conducted independently of the FIFA probe, FINMA said it identified “commonalities” with respect to Credit Suisse's shortcomings in all three cases. 

“To combat money laundering effectively, every relevant department within the bank must be able to see all the client's relationships with the bank instantly and automatically,” FINMA said.

“Progress has been made,” by Credit Suisse, Switzerland's number two bank, FINMA added. 

The bank said that “implementing a culture of compliant growth at Credit Suisse is our highest priority and it is an individual and collective responsibility that we take extremely seriously.”

FINMA did not fine Credit Suisse and praised it for cooperating with the probe, but said the bank needed to step up its anti-money laundering efforts and that the success of those measures should be monitored by “an independent third party.”

Credit Suisse must “prove that higher-risk business relationships and transactions are adequately detected, categorised, monitored and documented,” FINMA said. 

For members


Reader question: Can a foreign national obtain a loan in Switzerland and under what conditions?

When it comes to borrowing money from a Swiss bank, nationality may play a role in some cases, but not in others. This is what you should know about this process.

Reader question: Can a foreign national obtain a loan in Switzerland and under what conditions?
Getting a losn in Switzerland is subject to many conditions. Photo by Claudio Schwarz/Unsplash

Like almost everything in Switzerland, consumer loans are regulated by legislation, in this case the Consumer Credit Act.

It defines a loan as between 550 and 80,000 francs, “offered by commercial providers of financial services”. Lower or higher amounts are not subject to the Consumer Credit Act.

As is the case in many other countries, Swiss banks have strict criteria about who they lend money to. After all, no financial institution wants to deal with people who are not creditworthy.

Whether or not a foreign national can borrow money from a bank depends on their permanent place of residence and permit status.

As a rule, Swiss lenders don’t give loans to non-residents. So if you reside abroad, there is practically no chance that a bank in Switzerland will lend you money.

However, some financial institutions make exceptions for cross-border workers. If you fall under this category, you can use this interactive tool, select “ Permit G” under “Residence Permit” and see what, if any, options, there are.

READ MORE: EXPLAINED: What cross-border workers should know about taxation in Switzerland

If you are a foreign national but have a permanent residence status (Permit C), your chances of getting a loan are practically the same as those of Swiss citizens — provided, of course, that you meet all the requirements set by lenders (see below).

What about other permit holders?

If you have a B Permit, you might be approved for a loan, depending on how long you have had this permit — obviously, the longer the better.

However, “you may be offered a higher interest rate or a limited loan amount. This is because of the statistically higher probability that you will return to your home country. Some lenders require the loan to be repaid by the time the B permit expires”, according to consumer comparison site 

Holders of other, temporary or conditional permits are not accepted.

READ MORE: ‘A feeling of belonging’: What it’s like to become Swiss

What conditions — other than residence permit — should you fill to be considered for a loan?

You must be at least 18 years of age, though additional restrictions may apply to applicants under 25 — for instance, a higher interest rate or a limited loan amount. That’s because “lenders are generally more cautious with young applicants as their financial circumstances are usually less settled and the risk of default is deemed to be higher,” Comparis noted.

The same cautious approach applies to pensioners, especially those who have no regular income. The social security payments (AHV/AVS) do not count as income for the purpose of the loan.

There is also other eligibility criteria, based on employment status and salary. People with a regular income have a higher chance of obtaining a loan than those who are self-employed, temporarily employed, work on hourly basis or, logically, unemployed.

Other factors, including your existing debts, are also taken into account in the decision process.

Basically, lenders favour applicants with a stable income and good financial standing, in much the same way as supplemental health insurance carriers prefer young and healthy people.

Keep in mind that if your loan application is rejected, this will be recorded in the database of the  Central Office for Credit Information, making it more difficult, though not impossible, to get a loan in the future.

The same rules do not apply to American citizens

That’s because Swiss and European banks are subjected to US demands to disclose the assets of Americans overseas in order to prevent tax evasion.

As adherence to these requirements is a major headache for the banks and in some cases also violates their country’s privacy laws, financial institutions prefer not to deal with Americans at all, even those who are permanent residents.

If you are a US citizen who also has Swiss nationality, you may have an easier time of it, but could still face hurdles in obtaining loans and other banking services.

There is no immediate relief in sight, although many organisations representing Americans abroad are lobbying in Washington to change the existing legislation.