Watchdog urges Swiss banks do more to fight money laundering

Swiss banks must step up their fight against money laundering, the head of the country's financial watchdog said on Thursday in the wake of a massive document leak showing how offshore companies were used to conceal cash.

"The risk posed by money laundering is on the increase in Switzerland and banks need to do more to combat it," FINMA Chief Executive Mark Branson said in remarks prepared for the watchdog's annual news conference.

Branson's comments come days after a leak of four decades of documents from a Panamanian law firm that specialises in setting up offshore companies showed widespread use of those instruments by global banks on behalf of their clients and triggered a raft of government investigations across the world.

The so-called "Panama Papers", revealed through an investigation by the International Consortium of Investigative Journalists, exposed financial arrangements of politicians and public figures including friends of Russian President Vladimir Putin, relatives of the prime ministers of Britain, Iceland and Pakistan, and the president of Ukraine.

Branches of Swiss lenders such as UBS and Credit Suisse were mentioned in the leaked documents as being among the main banks that requested the most offshore companies for clients.

Credit Suisse CEO Tidjane Thiam said on Tuesday his bank was after only lawful assets.

UBS said on Monday it conducted its business in full compliance with applicable law and regulations and that it had no interest in funds that are not taxed or derive from unlawful activities.

Branson said a number of Swiss banks were involved in the corruption scandal surrounding Brazil's Petrobras and suspicious cash flows linked to the Malaysian sovereign fund 1MDB.

"FINMA has carried out investigations into more than 20 banks in connection with these cases, and has opened seven enforcement proceedings against institutions," Branson said. "There are concrete indications that the measures those banks had in place to combat money laundering were inadequate."

Reuters - Reporting by Joshua Franklin; Editing by Michael Shields