Credit Suisse and UBS under scrutiny in US sanctions probe

At its peak, Credit Suisse managed more than $60bn for Russian clients, who generated between $500m and $600m a year in revenue for it

The Justice Department is seeking to identify which UBS and Credit Suisse employees dealt with clients under sanctions. Bloomberg
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Credit Suisse and UBS are among the banks under scrutiny in a US Justice Department probe into whether financial professionals helped Russian oligarchs to evade sanctions.

The Swiss banks were included in a recent wave of subpoenas sent out by the US government, sources said.

The information requests were sent before the crisis that engulfed Credit Suisse and resulted in UBS’s proposed takeover of its rival.

Subpoenas also went to employees of some big US banks, two sources said.

The Justice Department inquiries are focused on identifying which bank employees dealt with clients under sanctions and how those customers were vetted over the past several years.

Those bankers and advisers may then be subject to further investigation to determine if they broke any laws.

Credit Suisse and UBS both declined to comment.

Before the Russian invasion of Ukraine resulted in expanded sanctions, Credit Suisse was well-known for catering to wealthy Russians.

At its peak, the bank managed more than $60 billion for Russian clients, who generated between $500 million and $600 million a year in revenue for Credit Suisse.

At the time it discontinued its business with individual Russian clients last May, Credit Suisse held about $33 billion for them, 50 per cent more than UBS, despite the latter’s larger wealth management business.

The Justice Department last year launched its KleptoCapture task force to enforce sanctions on wealthy Russians who are political allies of President Vladimir Putin.

The US government has since seized a number of yachts, private planes and luxury properties.

Last month, the US moved to seize homes in New York, Florida and the Hamptons owned by oligarch Viktor Vekselberg, who is under sanctions.

A number of people have also been charged with helping oligarchs to hide assets.

British businessman Graham Bonham-Carter was arrested in October on charges that he illegally transferred $1 million to maintain US properties for billionaire Oleg Deripaska, who is also under sanctions.

A former senior FBI agent was also charged with helping Mr Deripaska to breach the sanctions in January.

Banks can face serious penalties for breaching US sanctions.

In 2014, BNP Paribas agreed to pay about $9 billion after pleading guilty to US charges that accused it of processing transactions for Sudanese, Iranian and Cuban organisations under sanctions.

In 2019, Standard Chartered agreed to pay more than $1 billion to settle a Justice Department probe, in which a former bank employee pleaded guilty to conspiring to breach US sanctions on Iran.

As the Credit Suisse rescue plan emerged at the weekend, UBS expressed general concerns about taking on its rival’s potential legal liabilities.

The Swiss government has said it would guarantee up to 9 billion francs ($9.8 billion) in losses to UBS from the deal.

US Deputy Attorney General Lisa Monaco said in early March that the Justice Department was responding to the “uncertain geopolitical environment” by beefing up its national security division, which enforces sanctions.

“Corporate crime and national security are overlapping to a degree never seen before, and the department is retooling to meet that challenge,” Ms Monaco said.

Updated: March 24, 2023, 6:09 AM

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