The money laundering scandals are mounting: UBS is threatened with a three billion Swiss franc fine for allegedly helping French clients with tax fraud. Several other Swiss banks have to deal with the federal prosecutor’s office, which follows the trail of billions that have disappeared from the Lebanese central bank. And more than 30 other financial institutions are involved in the latest corruption money scandal from Venezuela – including Julius Baer, Société Générale and Bank Leu, which belongs to Credit Suisse.
The Venezuelan elite around President Nicolás Maduro (58) is said to have laundered over nine billion francs in their accounts in recent years. A large part of the black money has already left Switzerland: Now it is in luxury watches and yachts of high-ranking officials of the mouse-poor South American country. Geneva and Zurich public prosecutors, federal prosecutors and the Financial Market Authority (Finma) investigate.
The Bär bank was also involved in a Fifa corruption scandal. The bank stresses that they have now improved their control systems. Her former head chef Boris Collardi (46) got away with a Finma complaint. Today he is a partner at the posh Geneva bank Pictet.
Bonuses are intended to increase the will to perform
The topic of money laundering is not over yet for the new UBS CEO Ralph Hamers (55rei): Under his leadership, the Dutch bank ING was fined € 775 million for illicit money transactions in 2018. Now a Dutch court is examining whether the former ING boss is wearing it personally.
For his first four months at UBS, Hamers received 4.2 million Swiss francs. In total, the bank paid out over three billion in bonuses for the squad in the corona crisis year 2020 – 24 percent more than in the previous year. UBS announces: “80 percent of the performance-related compensation of the Executive Committee has been deferred and is subject to the risk of forfeiture over a period of five years.”
However, this does not change the level of remuneration, and not just at UBS: Many Swiss banks offer their managers powerful incentives. They should increase the will to perform – but above all they fuel the willingness to take risks. This was the undoing of Credit Suisse in its fatal deals with dubious hedge funds. And in rows, Swiss financial houses failed because of their striking daring when it comes to black money.
Then both eyes are closed
Your bonuses are “relatively high,” said Finance Minister Ueli Maurer (70) this week in the direction of the bankers: “And then you take risks.” With the result that even with money from Venezuela – whose elite are among the most corrupt in the world – both eyes are turned a blind eye. “The high bonuses are central drivers of the money laundering problem”, confirms Mathias Binswanger (58), economics professor at the University of Applied Sciences Northwestern Switzerland. “You set false incentives and then wonder if bank managers behave accordingly.”
In the course of these scandals, middle managers are often fired and persecuted. The top floors of the banks remain undisturbed. That is why the review of Ralph Hamers’ responsibility in the Netherlands is to be welcomed, says economist Binswanger: “The top managers have to answer for money laundering offenses. In view of their salaries, that’s not too much to ask. “
Compliance expert Monika Roth (70), professor emeritus at the Lucerne University of Applied Sciences, sees it similarly: “Due to the initial criminal situation, the Hamers case is unlikely to lead to a conviction.” But such cases must have regulatory consequences.
Roth continues: “Anyone who fails as a manager in preventing money laundering has to pay the price.” Means: Finma should exclude fallible top managers from management positions for several years. “That would be an effective step in the fight against money laundering, which is still an ongoing topic in Switzerland.”
Pressure is increasing, especially in asset management
Stefan Tobler (51), author of the standard work “The fight for Swiss banking secrecy”, points to another driver of risk tolerance: “The end of banking secrecy ten years ago led to the discontinuation of business with undeclared funds.” Therefore, the profit margins on the assets under management could have halved since the pre-financial crisis. Tobler: “The pressure to take risks is increasing, especially for banks that specialize in asset management.”
The author warns, however, against overly simple assignments of blame: Dealing with such money is not just a question of legality. “Financial relations with countries that are considered politically correct today may be frowned upon tomorrow. This is not always easy for the banks to predict. “
One thing is clear: you can earn good money with white laundry. This also applies to lawyers and consultants who mediate between banks and customers. That is why the Federal Council wanted to make them more responsible for the revision of the Money Laundering Act. But the parliament from: In the final vote at the beginning of March, the passage was deleted. “He would have massively violated legal confidentiality,” defends the Middle National Council and lawyer Philipp Bregy (42) the decision. The money laundering law is up to date: “Switzerland has played a pioneering role in the fight against black money for years.”
The risk has remained high
Martin Hilti (46), Managing Director of Transparency International Switzerland, contradicts: “The Money Laundering Act offers too many loopholes. The current cases show that the problem is still acute. ” Switzerland does not even achieve minimal international standards in important areas, says Hilti. “In addition, too many banks, including large houses, do not meet the due diligence and reporting obligations.”
Finma spokesman Vinzenz Mathys hits the same note: “Suspected cases belong on the table of the authorities, not in the drawer of the institutes concerned.” For Mathys it is clear: “The money laundering risk has remained high.”
In its annual report, Finma warns banks against “accepting profitable new customers from emerging countries with a high risk of corruption.”
That is exactly what happened in the Venezuela scandal.