A Swiss Court Convicted Credit Suisse of Laundering Cocaine Money in June 2022, the First Criminal Conviction of a Major Bank in the Country's History. Nine Months Later, the Bank No Longer Existed.

On the weekend of March 18–19, 2023, the president of the Swiss Confederation, the head of the Swiss National Bank, and the chief executives of the country's two largest banks worked through two nights to close a deal before Asian markets opened Monday morning. The government invoked emergency law to bypass a shareholder vote that might otherwise have taken six weeks. By Sunday evening, Credit Suisse — founded in 1856 by railway financier Alfred Escher to fund Swiss infrastructure the French banks wouldn't touch — belonged to UBS, the crosstown rival it had spent 167 years trying to outdo, for 3 billion Swiss francs.

The bank did not fail on the strength of a single scandal. It failed on the accumulated weight of several, spaced out just far enough that each one seemed, at the time, survivable on its own: a bribery scheme in Mozambique, a corporate espionage operation against its own former executive, a hedge fund collapse other banks saw coming and quietly avoided, a $10 billion set of investment funds built on a supply-chain financier who imploded, and a criminal conviction — the first ever handed to a major Swiss bank — for laundering the proceeds of cocaine trafficking. Each one produced a press release, a fine, an apology, and an assurance that lessons had been learned.

A tuna fleet that mostly wasn't

In 2013, Credit Suisse arranged more than $1 billion in loans and bond financing for three state-owned companies in Mozambique, one of the world's poorest countries, officially to buy coastal patrol vessels and build a tuna fishing fleet. The loans were backed by government guarantees the Mozambican parliament had never approved and that were never disclosed to the bondholders who ultimately funded them.

• Privinvest, the shipbuilding conglomerate owned by Lebanese-French businessman Iskandar Safa, paid more than $100 million in kickbacks to Credit Suisse bankers and Mozambican officials to secure the deals, according to U.S. and U.K. investigators.
• Much of the fleet was never fully built. The hidden debt, once revealed, triggered a Mozambican currency collapse and an IMF aid suspension.
• In October 2021, Credit Suisse agreed to pay $475 million to resolve the matter — $175 million to the U.S. Justice Department, $99 million to the SEC, and $200 million to the U.K.'s Financial Conduct Authority — and forgave $200 million of Mozambique's debt.
• Lara Warner, the bank's former head of risk and compliance, was separately fined 100,000 Swiss francs by FINMA for failing to promptly report suspicions of money laundering in the deal.

The man who left for UBS

In August 2019, Credit Suisse's chief operating officer, Pierre-Olivier Bouée, learned that Iqbal Khan, the bank's former head of international wealth management, was leaving to join UBS. Bouée ordered private detectives to surveil Khan, reportedly to determine whether he was trying to recruit former colleagues to follow him across town.

Khan was tailed on seven business days between September 4 and September 17, 2019, before he confronted one of the detectives on a Zurich street and called the police. The intermediary who had hired the surveillance firm on the bank's behalf died by suicide days after the story became public. Bouée resigned on October 1, 2019. An internal investigation found he alone had ordered the surveillance and cleared then-CEO Tidjane Thiam of direct knowledge — who nonetheless resigned the following February, as the board concluded the culture that had produced the episode was, at minimum, his to answer for.

The client other banks saw coming

In March 2021, Archegos Capital Management — a family office run by Bill Hwang, built on concentrated, heavily leveraged bets on a handful of stocks including ViacomCBS — defaulted after those stocks fell sharply and its lenders issued margin calls it couldn't meet. Every prime broker exposed to Archegos was working from the same information. They did not act on it at the same speed.

• Morgan Stanley quietly sold roughly $5 billion of Archegos-linked stock the night before the broader unwind became public knowledge.
• Goldman Sachs followed the next morning, offloading more than $10 billion in shares on March 26 before rivals could react.
• Credit Suisse acted last. An independent review it commissioned put its total loss at $5.5 billion and blamed a "fundamental failure of management and controls" in the division responsible.
• FINMA later found that Credit Suisse had "seriously and systematically" violated Swiss banking law by failing to identify, limit, or monitor the risk in the relationship.
• Hwang was convicted on ten counts of wire fraud, securities fraud, and market manipulation in July 2024 and sentenced to 18 years in prison that November, for conduct a federal judge said caused losses "larger than any other losses I have dealt with."

Ten billion dollars, marketed as safe

Since 2017, Credit Suisse had run four investment funds, worth roughly $10 billion in client money, built around short-term debt originated by Greensill Capital, a supply-chain finance firm. A large share of that debt traced back to a single borrower: Sanjeev Gupta's GFG Alliance, a metals conglomerate.

When Greensill's credit insurance lapsed in March 2021, Credit Suisse froze the funds within days, and Greensill filed for insolvency shortly after. The bank has since recovered $7.4 billion of the $10 billion and told investors to expect a "hard grind" — potentially five years — to recover the rest, much of it tied up in Gupta-linked assets still being untangled in court. FINMA concluded in February 2023 that Credit Suisse had "seriously breached" its supervisory obligations, describing the same pattern it would go on to describe in the Archegos case: risk flagged internally, and not acted on.

The first conviction of its kind

In June 2022, Switzerland's Federal Criminal Court convicted Credit Suisse of failing to prevent a Bulgarian cocaine-trafficking organization from laundering its proceeds through the bank between 2004 and 2008 — the first criminal conviction of a major Swiss bank in the country's history. The court ordered Credit Suisse to pay roughly $22 million, finding that the bank's relationship managers had continued servicing the accounts well after red flags should have ended the relationship.

Credit Suisse said it "fundamentally disagreed" with the verdict and appealed it.

An annual report nobody wanted to sign

On March 14, 2023 — five days before the takeover — Credit Suisse published its delayed 2022 annual report. It had been held up after a "late call" from the SEC questioning revisions the bank had made to cash flow statements from 2019 and 2020. The report itself disclosed "material weaknesses" in internal controls over financial reporting for both 2021 and 2022; auditor PwC issued a formal adverse opinion on those controls while still signing off on the underlying financial statements as fairly presented.

The bank reported a full-year net loss of 7.3 billion francs for 2022, its worst since the 2008 financial crisis, and confirmed that clients had pulled 123.2 billion francs over the year — including 110.5 billion in the fourth quarter alone — and that the outflows had "not yet reversed."

One comment, one weekend

The next day, March 15, 2023, a Bloomberg Television interviewer asked Ammar Al Khudairy, chairman of the Saudi National Bank — Credit Suisse's largest shareholder, at just under 10% — whether it would consider putting up more capital. "The answer is absolutely not," he said. Credit Suisse shares fell to a record low within hours and the cost of insuring its debt against default spiked. The Swiss National Bank offered Credit Suisse a 50 billion franc credit line that same evening. It did not stop the outflows.

By Sunday, March 19, Swiss authorities had brokered UBS's takeover of Credit Suisse for 3 billion francs in stock — UBS paid 0.76 francs a share against a Friday close of 1.86, a roughly 60% discount — backed by a 100 billion franc Swiss National Bank liquidity guarantee and a 9 billion franc government loss guarantee. Regulators simultaneously wrote down $17 billion of Credit Suisse's Additional Tier 1 bonds to zero, while shareholders — who ordinarily rank below AT1 bondholders in a wind-down — still received $3.25 billion in UBS stock. Bondholders sued. Al Khudairy resigned as Saudi National Bank's chairman twelve days later, citing personal reasons.

In November 2024, Switzerland's Federal Supreme Court threw out the cocaine-laundering conviction entirely. The relationship manager whose conduct had anchored the case had died in April 2023 — a month after the UBS takeover closed — and the court ruled her guilt could no longer be tested without violating her presumption of innocence. Credit Suisse, the institution the 2022 verdict had actually convicted, was not in a position to appeal on its own behalf, or to have an opinion about the outcome at all. By then it had not existed, under that name, for a year and a half.

Filed from public reporting:

• SEC — "Credit Suisse to Pay Nearly $475 Million to U.S. and U.K. Authorities to Resolve Charges in Connection with Mozambican Bond Offerings"
• FCA — "Credit Suisse fined £147,190,276 and undertakes to forgive US$200 million of Mozambican debt"
• CNN — "Credit Suisse COO Pierre-Olivier Bouée quits over Iqbal Khan spying scandal"
• Bloomberg — "Credit Suisse Contractor in Khan Spying Case Dies of Suicide"
• Paul, Weiss — "Credit Suisse Publishes Independent Review of Archegos Losses"
• FINMA — "Archegos: FINMA Concludes Proceedings Against Credit Suisse"
• U.S. DOJ (SDNY) — "Founder And Head Of Archegos Capital Management Bill Hwang Sentenced To 18 Years In Prison"
• FINMA — "FINMA Concludes 'Greensill' Proceedings Against Credit Suisse"
• CNBC — "Credit Suisse found guilty in money-laundering case"
• The Globe and Mail — "Credit Suisse conviction annulled in 2022 cocaine cash laundering case"
• CNBC — "Credit Suisse finds 'material weaknesses' in financial reporting, says outflows not yet reversed"
• Bloomberg — "Saudi National Bank Chairman Al Khudairy Resigns Post Credit Suisse Comment"
• NPR — "UBS to buy troubled Credit Suisse in deal brokered by Swiss government"
• CNBC — "$17 billion of Credit Suisse bonds worthless following UBS takeover"