Staff at Switzerland’s second-largest bank are in for an extra bonus if they report fraudulent actions of their colleagues.

A declining sense of loyalty by banking staff is making life hard for their employers: it is the breeding ground for fraudulent behavior that proved costly for numerous companies already. Tidjane Thiam, the Credit Suisse boss, on Wednesday told the media that his biggest headache was how a single careless act by one banker could damage the reputation of all his 50,000 members of staff.

It therefore came as no surprise that the bank is rewarding employees for notifying the bank if they detect a fraudulent act by a colleague. A positive incentive in the form of an extra bonus was what they could expect for their report, for detecting and addressing a problem, as Thiam put it.

Costly Settlements 

Fraud by staff is costly – Credit Suisse in November for instance had to fork out $135 million to settle a case of forex manipulation. The U.S. authorities highlighted that many executives had fostered a climate of corruption in a bid to avoid controls.

Credit Suisse in the past weeks had to pay millions in Hong Kong after local regulators had detected a violation of rules over a period of no less than 14 years.

China Risks?

The banking giant acknowledged legal risks arising from hiring in Asia, in its latest financial report. Other banks have landed in hot water for giving jobs to rich Chinese with family ties to high-ranking members of the authorities. The risk of corruption rises from those links – a threat other banks in the region also face.

The bank’s response to the problem is to urge members of staff to essentially snitch on their colleagues. Thiam said that 3 to 4 percent of wider society are willing to engage in wrong-doing – there’s some work to do then.

Risky Strategy

Good intentions behind this new practice, for sure. But Credit Suisse is also walking the tightrope because paying a bonus for reporting colleagues fosters a climate of mistrust or even paranoia among the members of staff – and may yet land innocent bankers in troubles due to false reports by envious colleagues.