Credit Suisse faces penalties over Mozambique loan deals
ZURICH (AP) — Credit Suisse has announced settlements with British, Swiss and U.S. authorities in connection with loans provided to state companies in Mozambique, with the Swiss financial markets authority setting new restrictions on the top-drawer bank and saying it “seriously violated” anti-money-laundering requirements in the case.
The Zurich-based bank stated that it will take a $230million charge in the third quarter for the settlements. According to the bank, the U.S. settlement was worth $275 millions. It also stated that it would pay a penalty of approximately $200million and forgo loans of $200 millions to Mozambique’s Government under an agreement with British regulators. The Swiss financial market authority, FINMA said Credit Suisse had failed to file a “suspicious Activity Report” and that it didn’t adequately address the risks associated with some lending transactions with government.
In 2013, two loans totaling $1 million were arranged by British subsidiaries of Credit Suisse to guarantee loans to Mozambique’s state-owned entities ProIndicus (or Empresa Mocambiana de Atum) and Empresa Mocambiana de Atum (or EMATUM), according to the Swiss authority. It stated that the loans were mainly intended to finance maritime security vessels and a tuna flotilla.
” Large loans to economically weak or corrupt-prone countries pose high reputational risk,” FINMA stated. “Credit Suisse seriously violated the organizational requirements and the (Anti-Money-Laundering Act) reporting obligations in connection with loans it made to state-owned companies in Mozambique in 2013.”
The Swiss authority said Credit Suisse has already taken some steps to improve its risk-management and control systems, but that it would appoint an independent third-party to review the measures put in place and make sure they are effective. It also stated that Credit Suisse’s credit transactions with “financially poor and corrupt-prone states or companies with guarantees of such states” must be reviewed. Two years ago, five people were charged by the U.S. in connection with a $2 billion fraud that involved sham fishing, naval and other projects in Mozambique.
The announcements were made late Tuesday by the U.S., British and Swiss authorities. pending cases.
The Mozambique case, which involves activities between 2013 & 2016,, highlights another episode of problems for Credit Suisse. Earlier this year, FINMA stated that it was investigating possible penalties against Credit Suisse for its announcement of billions in losses due to a default by Archegos Capital (U.S.-based) on margin calls.