Credit Suisse Cyberattack Reveals Dirty Laundry

The Swiss banking world has always been secret. Very secret. Even after the U.S. worked out a deal to try and get information from the Swiss for tax evasion reasons, there is still not much transparency. Credit Suisse has had its share of troubles recently including helping wealthy customers evade taxes, engaging in illegal business with Iran, and selling toxic mortgages to investors.

Hackers leaked the details of about 30,000 customers who are located all over the world. If Credit Suisse’s reputation wasn’t already in the toilet, it is now. The leak points to a massive failure in due diligence.

The bank is or was holding accounts for a human trafficker, a stock exchange boss who was jailed for bribery, a billionaire who ordered the murder of his girlfriend, and many other less than upstanding citizens.

The whistleblower leaked the data to a German newspaper with the statement that he thinks that Swiss bank secrecy laws are immoral. While the Swiss call this privacy, he says that it is really a fig leaf for the shameful role of Swiss banks as collaborators of tax evaders.

In fairness to the bank, at least some of these allegations do date back to times when Swiss banks did look the other way and accepted large deposits from damn near anyone. Some of the accounts leaked date back to the 1940s, but others were opened in the last 20 years and many are still open today.

Credit Suisse is the first major Swiss bank to face criminal charges EVER, not directly related to this leak.

But the reverberations are going to be far wider than this bank and even that country as many of the customers are not Swiss.

I am sure that tax authorities in many countries will be “reviewing” this data, now that it has been exposed. That could make for more than a few uncomfortable conversations about back taxes.

Whether the Swiss decide to make more reforms to their banking laws or not is to be determined, but there will be, no doubt, pressure to do that.

The fallout from this will last months if not years and will keep the Swiss’ reputation in the gutter for a long time.

And then there is the conversation about how did this happen. This has to be an insider leak – there is no other possibility. But how did that person do this? Doesn’t the bank have any security at all? Likely bank customers will ask that question whether their personal data was leaked this time or not. How many ultra-high net worth customers will the bank lose? What will the financial impact be? I don’t think I would want to work for the bank right now. Could be a very hard next couple of years.

For more details, see this article in the Guardian.

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