Panama Papers leak prompts money-laundering investigation of Swiss banks
Corrections and clarifications: An earlier version of this story gave the wrong year the U.S. fined UBS more than $500 million.
GENEVA — There was a sense of déjà vu in Switzerland this week when the attorney general’s office here announced an investigation into the role Swiss banks may have played in potentially illicit financial transactions exposed by the Panama Papers.
Even though Switzerland has strong anti-money laundering laws and banks have their own strict regulations to combat wrongdoing, this is hardly the first time Swiss financial institutions may have run afoul of the law. Swiss banks are the world’s biggest wealth managers, with an estimated $2 trillion of offshore wealth, and dozens of them have been the focus of international investigations and paid hefty fines for violations.
Sunday’s leak of 11.5 million documents from the Panama law firm Mossack Fonseca, which helps clients hide financial assets, revealed that Switzerland’s largest bank, UBS, created 1,100 offshore companies, and the second largest, Credit Suisse, set up 1,105.
“There is a risk that criminal offenses may have been committed,” Olivier Jornot, the Geneva Canton’s chief prosecutor, told Switzerland’s RTS television Thursday.
Mark Branson, chief executive of the Swiss government agency responsible for financial regulation, said Thursday at a news conference in Bern that his organization would launch its own investigation if there is any evidence that the country’s institutions participated in money-laundering or other illegal schemes to hide their clients’ wealth using Panamanian corporations.
“The risk posed by money laundering is on the increase in Switzerland and banks need to do more to combat it,” he conceded.
In 2009, UBS paid a $780 million penalty to to settle U.S. tax evasion charges. In 2014, Credit Suisse paid a $2.6 billion fine to settle similar charges.
In 2015, the U.S. fined UBS more than $500 million in fines for its role in manipulating currency markets. And earlier this year, Belgium started the investigation of UBS on suspicion of money laundering.
Both banks denied any wrongdoing in offshore dealings revealed in the Panama Papers. UBS told Agence France-Presse news service that the bank “conducts its business in full accordance with the applicable regulations and has no interest in funds which come from illegal activity. “
Credit Suisse CEO Tidjane Thiam said his bank “only accepts offshore structures if they serve legitimate purposes. Tax avoidance is not one of those.”
The Panama Papers did not only shed light on the activities of Switzerland’s financial industry. On Wednesday, Swiss police swooped down on the headquarters of European football’s governing body to seize evidence showing involvement in a secret offshore company by one of its former officers, Gianni Infantino, who now heads the world global soccer organization, FIFA.
“The Panama Papers have made for very interesting reading for all of us,” said financial regulation chief Branson.