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Credit Suisse employee probed after bank money laundering report

Friday, December 2, 2016 - 15:14
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Geneva prosecutors are investigating an employee at Credit Suisse Group AG and two former staffers after the bank flagged suspicious transactions to local anti-money laundering authorities, according to people familiar with the matter.

[GENEVA] Geneva prosecutors are investigating an employee at Credit Suisse Group AG and two former staffers after the bank flagged suspicious transactions to local anti-money laundering authorities, according to people familiar with the matter.

The probe, confirmed by the bank, is the second one currently linked to the wealth-management operation in Geneva. It started last year and also focuses on two former Credit Suisse employees who went on to form asset management firm TG Investment Services SA.

The Credit Suisse employee is being investigated for insufficient diligence while the two employees of TG are alleged to have engaged in fraud and criminal mismanagement, the people said.

Zurich-based Credit Suisse has been tied up in a separate affair in which one of its Geneva bankers admitted last year to faking trades for rich Russian and Georgian clients in order to cover losses in their accounts. In both cases, the actions were centred in Geneva and targeted clients in faster-growing emerging markets that Credit Suisse is counting on for the growth of its wealth management business.

Both cases raise questions about what, if anything, the bank should have done differently to detect the fraud earlier.

Credit Suisse alerted the Money-Laundering Reporting Office of Switzerland in March 2015 to concerns about TG Investment Services, which was founded by former employees of the bank, said the people who didn't want to be named as the probe is ongoing.

Gregoire Rey, a lawyer who represents one of the two asset managers, said his client didn't profit from the alleged fraud and was only trying to cover losses that mounted to nearly 300 million Swiss francs (S$422 million).

"It's not a case of professional enrichment like Madoff," he said, adding that the bank should share some of the blame. "Credit Suisse knew about these losses and about the measures taken to try and cover these losses."

Credit Suisse said that the criminal probe is focused on the external asset managers, not the bank, and that it can't comment further with an investigation underway. A spokesman for the Geneva prosecutor said that a significant probe is underway focusing on accounts opened at Credit Suisse. He declined to confirm any details about the case or those accused of wrongdoing.

A phone number for TG Investment Services SA, listed as being in liquidation by the Geneva cantonal business registry, was no longer in service. A former executive at TG Investment Services reached via LinkedIn declined to comment.

BLOOMBERG