ZURICH (AP) — Credit Suisse has announced settlements totalling nearly USD700 million with British and United States (US) authorities over lending to Mozambique state-owned companies that Swiss regulators say violated anti-money laundering rules.
The Swiss financial markets authority also required the Zurich-based bank, Switzerland’s second-largest, to improve its risk controls.
Credit Suisse said late Tuesday that its US settlement involved some USD275 million. The bank said it would pay a USD200 million penalty under an agreement with Britain and forgive USD200 million in loans to the southern African nation. It said it expects to take a USD230 million charge in the third quarter in connection with the settlements, which are tied to activities between 2013 and 2016.
The bank’s British subsidiaries in 2013 arranged two loans guaranteed by Mozambique’s government totalling USD1 billion – equal to nearly six per cent of the country’s economic output – to state-owned companies ProIndicus and Empresa Mocambiana de Atum(EMATUM), the Swiss authority said. The loans were mostly intended to be used to pay for maritime security vessels and a tuna fleet, it said.
Several people in the African country, including former government officials, have been accused of bribery, embezzlement and money laundering related to the loans. US prosecutors also charged five people, including former Credit Suisse bankers Andrew Pearse, Surjan Singh and Detelina Subeva, in the USD2 billion fraud involving sham naval, fishing and other projects in Mozambique.
The Swiss financial market authority, FINMA, said Credit Suisse had violated its duty to file a “suspicious activity report” in the case and didn’t properly attend to the risks in some lending transactions with governments. “There are high reputational risks associated with large loans to financially weak or corruption-prone countries,” FINMA said. “Credit Suisse seriously violated the organisational requirements and the (Anti-Money-Laundering Act) reporting obligations in connection with loans it made to state-owned companies in Mozambique in 2013.”