What is the Credit Suisse Data Leak?
Credit Suisse is a global investment bank and financial services firm headquartered in Zürich, Switzerland. The company faces scrutiny from the European Parliament after a data leak showed that the company had performed financial services for human rights abusers, corrupt politicians, and people under sanctions for the past decades. More than 18,000 bank accounts were leaked by a whistleblower who said that the Swiss banking secrecy policies were “immoral”. The company has not been held accountable for the many money launderers and criminals they have done work with over the past years. Because of this leak, the company is now amidst a scandal.
The leaked information was initially leaked to the German newspaper Süddeutsche Zeitung. Clients of Credit Suisse, the second-largest Swiss bank, include a Yemeni spy chief connected to tortures, Venezuelan officials involved in a corruption scandal, and the sons of former Egyptian dictator Hosni Mubarak. Accounts in the bank were opened from the 1940s to the 2010s.
European Parliament’s Response
The three largest groups in the European parliament demanded that the European Union determine whether Switzerland should be classified as a high-risk country for financial crimes, including money laundering. The center-right European People’s Party’s spokesperson for economic and monetary affairs demanded that the European Commission reassess whether Switzerland posed a threat to the financial integrity of the bloc. The bloc refers to the political and economic alliances formed by the 27 European countries.
The spokespeople for the Socialists and Democrats and Renew Europe (large groups representing the left and center-left within the parliament) also voiced their support for the action to reassess the nation’s potential threat. Depending on the reassessment of the nation’s threat, the EU might add Switzerland to their list of rogue nations–defined as nations at high risk for money laundering.
The three aforementioned groups encompass 60% of the European parliament–meaning a majority of the parliament’s members are in favor of the motion to attack Switzerland’s role as a tax haven. Though for this movement to be enacted, political support from the European Commission, along with individual EU member states is needed.
Credit Suisse’s response to the leaks
Credit Suisse, in a statement in response to the leaks, denied any allegations and inferences about the bank’s criminal business practices. They stated that alleged criminal activities were historical and dated back to times when expectations and laws for financial institutions differed from today.
Clients from the bank closed nearly 90% of the accounts detailed in the leak before the media got a hold of the situation.
United States’ Response
Ron Wyden, the chair of the US Senate committee on finance, voiced his opinions of the situation: the criminal actions carried out by Credit Suisse were only possible due to the financial system looking the other way. He went on to say that the problem stems from the financial regulations Switzerland institutes and he advocated for a comprehensive change that will force companies to not be able to secretly conduct criminal activity.
The finance committee is assessing if Credit Suisse has complied with its 2014 agreement with the Department of Justice: promising to not allow US citizens to evade taxation.
What is Article 47?
Article 47, a law passed in Switzerland in 1934, essentially makes it a federal crime to disclose information of banking clients in Switzerland to foreign parties or even the Swiss authorities without the consent of a criminal complaint.
In the context of the Credit Suisse Data Leak, the article has blocked journalists within Switzerland from reporting on the leak in its entirety, while foreign journalists have free range. This has angered many Swiss journalists as they cannot report about and relay information about the situation that is taking place in their very own country.
What Has Happened to Credit Suisse Since the Initial Leaks?
Since the initial leaks, Credit Suisse’s share price has plummeted nearly 50% since the initial leaks. As of late July, the company has reported 3 straight quarters of losses and has had a net loss of $1.6 billion. To combat the losses, Credit Suisse has gone through rounds of layoffs and other drastic measures. Credit Suisse has admitted to its relaxed approach to scandals of this nature and has noted that it did not have the proper resources to preemptively respond to problems of this magnitude. On July 27th, they named a new CEO, Ulrich Körner, in hopes of overhauling the bank and starting anew.
About the author
Rishi is a writer with a focus on education and the economy. He is a senior in high school.
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