Saudi Corruption Crackdown – 100 billion reasons for panic at Swiss Banks?

Crown Prince Mohammed bin Salman’s crackdown on corruption in Saudi Arabia may have serious repercussions for Swiss Banks that have not complied with regulations regarding money laundering.

200 princes, ministers and former ministers have been arrested and detained and it is rumored that a flood of Money Laundering Inquiries are in the pipeline.

Switzerland has been a popular place for wealthy Saudis to store their wealth since the 1970s and according to the Financial Times’ sources, there has already been a flood of submissions regarding potential money laundering. Furthermore it is alleged that Switzerland’s banks have suddenly begun reporting suspicious account activity among some of their Saudi Arabian clients to the Swiss Money Laundering Reporting Office.

The exercise reflects the banks’ nervousness about being found in breach of rules governing money laundering and corruption.

From these reports it seems that Swiss banks are being hypersensitive given their history as safe havens for ill-gotten gains and the parabolic reach and power of financial regulators these days.

The Crown prince appears to be very interested in whether some of these assets were acquired illegally and this will cause a flood of enquiries from Saudi regulator searching whether any of the 200 arrestees have credit facilities or safety deposit boxes in Switzerland.

It is a bit too early to call as Saudi officials must first submit a formal request if they want access to the data. All requests are first analyzed by the Swiss authorities.

The office of the Swiss attorney-general told the Financial Times. “At this time, criminal proceedings in this connection have not been opened”. Swiss bankers also say they have begun to prepare cash transfers out of Switzerland on behalf of clients, as princes and business people seek to settle allegations against them. The Crown Prince is seeking to recover at least $100bn through the crackdown against “systematic corruption and embezzlement” that took place over several decades.

$100bn flowing out of the control of Swiss banks will be a harsh reduction in assets under control.

SUISHARE hopes that the Swiss Banks have learned lessons from the past and that no inappropriate behavior or facilitation of wrongdoing is at the basis of the management of this money. The Crown Prince has brought in top western investigators and auditors to work alongside finance ministry officials as they parse documents to analyze the extent of alleged corruption and prospective penalties. Foreign bankers are also been invited to Saudi Arabia in for questioning.