Credit Suisse and The American Connection

Credit Suisse CEO Brady Dougan dismissed claims on February 26 that managers at the bank were responsible for helping US nationals hide billions of dollars from the tax man. The scandal, Dougan said, was “centred on a small group of Swiss-based private bankers” who “went to great lengths to disguise their bad conduct.”

The banking boss was speaking before a US Senate panel as part of an extensive investigation that uncovered illegal banking practices on American soil between 2001 and 2008. Over this period, the Swiss bank managed around 12 billion Swiss francs, or around 9.8 billion euros, on behalf of around 22,000 US citizens. According to a Senate report released February 25, almost 90% of this money was not declared to the Internal Revenue Service (IRS).

The scathing report shed light on how Swiss bankers flaunted regulations to persuade wealthy US nationals to open secret accounts. FRANCE 24 presents concrete examples from the report to illustrate “The American Connection” that has rocked Credit Suisse.

  Credit Suisse and The American Connection

Nothing to declare

Between 2001 and 2008, Credit Suisse bankers made around 150 trips to the United States to solicit wealthy Americans or manage existing clients’ accounts. The bankers rarely told customs authorities the true purpose of their visit. For example, they would say they were travelling to the US to attend a wedding, and then spend the next seven to 10 days meeting existing clients or fishing for new ones.

Pampering clients

During their “vacations” to the US the Swiss bankers would often travel to several different cities, meeting clients at complimentary dinners. During one such stop, a Credit Suisse banker passed a bank account statement hidden inside a sports magazine to a client during breakfast at a luxury hotel.

Swiss Balls

Every year the Swiss Ball in New York gave Credit Suisse bankers a golden opportunity to approach wealthy US citizens. At one such gala in 2007, a representative of the bank sponsored a table at a cost of $6,500 (4,730 euros) in order to have the complete attention of guests with “a huge referral potential and an excellent network.”

Out golfing

The Senate report mentions “multiple golf events” sponsored by the Swiss bank in Florida and the Bahamas. During these events Credit Suisse bankers openly discussed opening accounts with potential clients. Initial accounts would be reported to US authorities, and unreported accounts would come later.

Next stop, offshore entities

As an added layer of protection against US authorities, Credit Suisse bankers encouraged their clients to set up offshore entities to conceal their links to the illegal funds. They kept a document listing “important phone numbers” of intermediaries well versed in setting up shell entities for US customers. More than 5 billion Swiss francs (3.4 billion euros) were deposited into these offshore structures.

Smaller cash transfers

In order to avoid certain US Treasury reporting requirements, bankers advised their US clients to make bank transfers under $10,000. The transaction of $10,000 or more requires filing a report with US authorities, so Credit Suisse told clients to break up large cash transfers into smaller ones. US law explicitly prohibits using this practice to avoid filing reports.

VIP cash cards

Representatives of Credit Suisse offered US customers very special credit cards and travel cash cards. Using a third-party intermediary, the VIP cards allowed US clients to secretly withdraw cash from their Swiss accounts wherever they were. For total discretion, the name of the client did not even appear on the travel cash cards.

The New York facade

The Senate report draws attention to misuse of Credit Suisse’s New York Representative Office, which opened in 1999 and closed in 2009. On paper the establishment was only supposed to solicit clients for loans. However, the facility was being used to open Swiss bank accounts for US clients with a minimum account size of $500,000. It appears that in 2008 Credit Suisse increased the minimum amount to $1 million.

Face to face

Leave no paper trail – and no electronic trace. Email communications between Credit Suisse representatives and their US customers were discouraged. Face-to-face meetings were the preferred form of communication, and if instructions had to be written down, they were supposed to be personally delivered via courier. After a tax scandal hit another Swiss bank, UBS, in 2008, the rules governing communications got even stricter. Clients could no longer contact their banker from the United States. A fax from the US would not be accepted.

Code name ‘SIOA5’

The Credit Suisse branch SIOA5, set up in Zurich international airport in 2006, was the ultimate banking outpost for US tax dodgers. The office allowed them to make the quickest of detours before heading for the ski slopes. But the office was not open to just any traveller. To get to it, customers had to take a special elevator with no buttons that was remotely controlled. Only Credit Suisse bankers and their special US clients could thus access SIOA5.