The US Department of Justice is expanding its investigation into Credit Suisse and UBS amid suspicions the banks enabled sanctions violations by Russian clients by ignoring compliance rules.
The Justice Department requested information from the banks on the handling of the accounts of sanctioned clients in recent years, according to the report which cited sources familiar with the matter, although no employees or executives have been questioned to date. At issue are sanctions imposed after Russia invaded Ukraine last year, and earlier measures following its annexation of Crimea in 2014.
The investigation is still at an early stage, and it's unclear whether charges will be filed or the case will be dropped, according to a «Bloomberg» report Wednesday.
UBS and the US Justice Department declined to comment.
Criticism of Switzerland
Investigators made requests directly to UBS, rather than via the often lengthy diplomatic route. Formally, requests for assistance from foreign prosecutors must be routed through the Federal Office of Justice (FOJ), which says it hasn't received any requests related to Credit Suisse, UBS, or the Russia sanctions to date.
Behind closed doors, US officials are said to have complained Switzerland isn't doing enough to enforce the sanctions to combat the money laundering that helps the Kremlin keep its economy afloat despite trade restrictions imposed by the US and its allies. They point to Switzerland's refusal to join a multilateral task force to pursue illegal Russian holdings.
Credit Suisse's Extensive Russian Expertise
Before the war in Ukraine, Credit Suisse was traditionally known for doing lots of business with wealthy Russians. At one point it managed funds worth 60 billion Swiss francs ($65.7 billion). After the Russian invasion of Ukraine, that was reduced by about half, although Credit Suisse managed more money from the relevant sources than UBS.
Even in the course of integrating Credit Suisse, UBS didn't want to completely dispense with Credit Suisse's Russian know-how. Among other things, it kept the top Credit Suisse banker for Russian business, Babak Dastmaltschi, on board.
Harsh Penalties
Sanctions violations can be punished very harshly in the US. In 2014, French financial group BNP Paribas pleaded guilty to violating US sanctions related to Sudan and had to pay $8.97 billion in fines.
