A Swiss front company for the U.S. and West German intelligence services supplied encryption equipment to the Swiss financial industry, finews.com has learned.

Crypto AG, which for years was a front company for American as well as German intelligence, supplied Swiss banks with encryption machinery, two people familiar with the matter told finews.com. The so-called Cryptofax HC-4220 (pictured below), which enabled the secure exchange of facsimiles between financial firms, was sold to banks and other finance intermediaries from the mid-1990s.

As recently as 2005/2006, private banks in Zurich and Geneva used the electronic equipment to transfer documentation related to account openings between various branches, the people said.

Cryptofax

Intelligence services for years used Crypto AG, which was dissolved last autumn, to eavesdrop on scores of messages between governments, embassies and military commands worldwide, as a media consortium reported this week. The HC-4220 was part of the company's product line until 2011.

Security of Encrypted Fax?

Even in the Internet era, crypto facsimiles are frequently used to transfer sensitive data safely. Crypto International, the Steinhausen, Switzerland-based successor firm to Crypto AG, continues to sell the HC-422X line of equipment as a safe method of communication.

The wider surveillance issue involving Crypto's encrypted machinery raises questions over the security of the crypto facsimiles. Though there is no evidence that American and West German intelligence officials were able to manipulate the equipment for espionage purposes, the proximity of the two companies raises huge questions for Switzerland's secretive banking industry.

Cybersecurity in Finance

Crypto International, the successor firm, didn't respond to a request for comment. A media consortium of Swiss broadcaster SRF, the Washington Post and German broadcaster ZDF pored over 280 pages of previously secret documents (other files related to the companies have been ordered sealed).

An erstwhile sister company, Baar, Switzerland-based Infoguard, provided cybersecurity services to some of the biggest players in Swiss finance including UBS, Credit Suisse, and stock exchange operator SIX, as finews.com reported on Thursday. A spokesman for Infoguard told finews.com it had no ties to intelligence services, nor was its management or employees ever influenced. 

Safeguarding Networks

However, Infoguard supplied products to the Swiss financial industry which were originally conceived by Crypto AG. Specifically, a so-called Layer 2 encryption solution, typically used to safeguard network infrastructure. The Infoguard spokesman said these types of encryptions were sold and installed roughly ten years ago. 

The products have largely been phased out by Infoguard's clients, the company said. «They have been evaluated as absolutely secure by outside monitors,» Infoguard's spokesman said. The products are equipped with a standard algorithm, he added.

Blurred Company Lines

Banks and finance firms queried by finews.com declined to detail any potential relationship to either firm. Crypto and Infoguard were closely entwined with regard to ownership and management.

Until a 2018 carve-out of Infoguard, now privately-owned, both companies belonged to a Liechtenstein-based holding – which served as the front company for the intelligence services.