Fearing of doing business with politically-exposed clients in a sanctions-hit country, Credit Suisse Group AG has cut relationships with a number of Venezuela’s wealthy.
Switzerland’s lender has cut assets it manages for the nation’s wealthy by more than half over the past few years, to about US$ 2 billion. The bank joins UBS Group AG, which last year closed certain accounts with links to Nicolas Maduro’s government or to PDVSA, the state-owned oil company.
Banks are increasing compliance efforts after paying billions of dollars over the past years for violating sanctions or running afoul of anti-money laundering laws. Venezuela has become a particular concern after the Trump administration and the European Union escalated measures against the country’s oil industry in an effort to encourage regime change. Switzerland have also imposed sanctions on Venezuelan officials.
Latin America is a fertile ground for offshore wealth managers, with many of the region’s wealthy families looking for ways to protect their assets from economic and political uncertainty. Credit Suisse had about 75 billion francs (US$ 85.6 billion) under management in the region in late 2019, according to a presentation at the time.
The bank in 2018 was ordered by Swiss regulator Finma to improve its processes after the regulator found deficiencies in Credit Suisse’s anti-money laundering due diligence in relation to Venezuela’s oil
corporation and other parties. As a result of the investigation, which covered the ten years through 2016, Finma also appointed an independent monitor.
Last month, Credit Suisse agreed to beef up protections against money laundering after the Federal Reserve identified deficiencies in the Swiss bank’s U.S. operations.
Finma last year criticized Julius Baer Group Ltd. for failing to do more to prevent money laundering in Latin America.
In 2018, one of Baer’s former bankers was sentenced to 10 years in prison for his role in laundering more than $1,2 billion that was stolen from PDVSA.