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Apparent due diligence failures by Swiss bank prompts centre-right calls for the EU to review relationships with Switzerland.

The fallout from a huge leak of Credit Suisse banking data threatened to damage Switzerland’s entire financial sector on Monday after the European parliament’s main political grouping raised the prospect of adding the country to a money-laundering blacklist.

The European People’s party (EPP), the largest political grouping of the European parliament, called for the EU to review its relationship with Switzerland and consider whether it should be added to its list of countries associated with a high risk of financial crime.

Experts said that such a move would be a disaster for Switzerland’s financial sector, which would face the kind of enhanced due diligence applied to transactions linked to rogue nations including Iran, Myanmar, Syria and North Korea.

“When Swiss banks fail to apply international anti-money-laundering standards properly, Switzerland itself becomes a high-risk jurisdiction,” said Markus Ferber, the coordinator on economic affairs for the EPP, which represents Europe’s centre-right political parties.

“When the list of high-risk third countries in the area of money laundering is up for revision the next time, the European Commission needs to consider adding Switzerland to that list.”

The EPP released the proposal after media outlets including the Guardian, Süddeutsche Zeitung and Le Monde revealed how a massive leak of Credit Suisse data had uncovered apparently widespread failures of due diligence by the bank.

“Bank privacy laws must not become a pretext to facilitate money laundering and tax evasion. The Suisse secrets findings point to massive shortcomings of Swiss banks when it comes to the prevention of money laundering,” Ferber said. “Apparently, Credit Suisse has a policy of looking the other way instead of asking difficult questions.”

He added that the close ties between EU and Swiss banks meant that anti-money-laundering deficiencies in Switzerland’s banking industry “also pose a problem for the European financial sector”.

Credit Suisse said in a statement it “strongly rejects the allegations and inferences about the bank’s purported business practices”, arguing that the matters uncovered by reporters were largely historical and based on “selective information taken out of context, resulting in tendentious interpretations of the bank’s business conduct”.

Its lawyers told the Guardian any past individual failings by the bank did not reflect its current business policies, practices or culture. The bank has since announced it has set up an internal taskforce to investigate the leak. “We have robust data protection and data leakage prevention controls in place to protect our clients,” it said.

Switzerland’s government has been approached for comment. The country’s addition to the EU high-risk third countries list would mean regulated professions, such as bankers, lawyers and accountants, would be required to conduct enhanced due diligence on any transaction or commercial relationship with a person or company in the country.

Crooks, kleptocrats and crises: a timeline of Credit Suisse scandals

Tom Keatinge, the director of the Centre for Financial Crime and Security Studies at the defence thinktank RUSI, said that being added to the EU list could have a significant and far-reaching impact on Switzerland’s banks, as well as its broader financial sector. “There is the potential for considerable collateral damage,” he said.

The Credit Suisse data was leaked to Süddeutsche Zeitung by an anonymous source who complained about “immoral” Swiss banking secrecy laws.

In Switzerland, politicians and media organisations reacted angrily to the discovery that Swiss investigative journalists had been prevented from participating in the Suisse secrets investigation because of the country’s notorious banking secrecy law.

Swiss law has for decades criminalised the disclosure of banking information by financial professionals. However, in recent years it was expanded to cover outsiders receiving banking data, potentially including investigative journalists.

Amid international controversy, Andrea Caroni, a Swiss politician who in 2015 advocated expanding article 47, the infamous section of a 1934 banking law that introduced extreme secrecy regulations, accepted on Monday that “maybe the rules are not set perfectly” and suggested he would be open to considering a review.

Samira Marti, a national councillor for the Swiss Social Democratic party, said the group would submit a proposal to combat article 47’s “censorship” in the spring session of the Swiss parliament, and called on the country’s centrist party, Die Mitte, and the Green Liberal party to support them.

The Green Liberals said they would back Marti’s call for action. “Journalism plays an essential role in uncovering illegal practices,” said Julie Cantalou, a co-secretary general of the party. “We are therefore supportive towards the idea to reform article 47, and look forward to working with Samira Marti on this important matter.”

Source: Guardian 



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