Technical Staff
February 22, 2022
The revelations of this massive leak are chilly, fearful, shameful, and alarming. The Guardian report says that Credit Suisse has been hit with at least a dozen penalties and sanctions over the last three decades for tax evasion, money laundering, purposeful violations of US sanctions, and frauds committed against its own customers. It has amassed fines and settlements totaling more than $4.2 billion. It is plausible to agree with Jeff Neiman, a Florida-based attorney who represents a number of Credit Suisse whistleblowers when he says, ” “The bank likes to say it’s just rogue bankers. But how many rogue bankers do you need to have before you start having a rogue bank?”” 1
There must be a “deeply ingrained culture” at the bank and a tone at the top that motivates, protects, and rewards such “banking” practices.
Banking Secrecy and Corruption
Banking secrecy practices should comply with the applicable laws, rules, and regulations. Those laws were designed to serve a purpose: protecting client privacy. They were not designed to provide a haven for corrupt politicians, especially from developing countries, criminals, and money launderers. Banks are trusted to comply with the law. They should not aid and abet clients to violate the law. Banks should apply effectively the KYC procedures and carry out “enhanced due diligence”, mainly for those who are classified as a “politically exposed person” PEP.
“The Tax Justice Network, a lobby group, calls the United States one of the world’s top three “secrecy jurisdictions”, behind Switzerland and Hong Kong.” 2 Nobody knows how much money is kept overseas that isn’t declared. Various estimates range from a few trillion dollars to 30 trillion dollars. 3
Undeterred Banks
Over the past two decades, it is evident that many banks accepted to pay fines and penalties and continued in their shadow banking practices. When regulators or courts settle with a bank or impose on it certain penalties, they expect the bank to change behavior and be deterred from doing such acts again. Unfortunately, the Guardian report shows that Credit Suisse was not deterred!
Banking practices that are shrouded in secrecy are inextricably linked to corruption.
Notes
1 . Revealed: Credit Suisse leak unmasks criminals, fraudsters and corrupt politicians, The Guardian; London, February 20, 2022. Accessed on February 22, 2022, https://www.theguardian.com/news/2022/feb/20/credit-suisse-secrets-leak-unmasks-criminals-fraudsters-corrupt-politicians
2. The biggest loophole of all; Financial transparency The Economist; London Vol. 418, Iss. 8977, (Feb 20, 2016): 51-52.
3. Ibid
References
Irwin-Hunt, Alex. 2020. “Country Seeks to Shed ‘Tax Haven’ Label After ‘Largely Compliant’ Bill of Health: Transparency Government has Acted to Tighten the Rules, but Critics Say there is More Work to be done.” Financial Times, Sep 15, 2.
