LONDON, Jan 15 (Reuters) - Britain's financial watchdog has dropped a criminal probe into Credit Suisse related to an alleged fraud in Mozambique, but is still checking the bank and individuals for any breaches of conduct rules, the watchdog said on Tuesday.
In 2016, the Financial Conduct Authority (FCA) launched an investigation into the Swiss bank's activities in Mozambique, where around $2 billion of loans to state-owned companies pushed the country into a debt crisis.
Appearing before British lawmakers on Tuesday, FCA chief executive Andrew Bailey confirmed a newspaper report that the watchdog had downgraded its investigation in August, saying it had no power to prosecute under Britain's anti-bribery law.
"We concluded we couldn't bring a criminal case," he told parliament's Treasury Select Committee.
"But our regulatory powers still apply to both the individuals and the firm, and that would be in respect of systems and controls of the firm, and also in respect to fitness and properness in respect to the individuals."
The FCA does not usually publicly comment or provide updates on ongoing investigations.
Credit Suisse declined to comment on the case.
Three former Credit Suisse bankers were arrested in London this month on U.S. charges of conspiring to violate anti-bribery law and to commit money laundering and securities fraud.
Debt cancellation activists have criticised British authorities for not taking a leading role in the investigation given that the lender's London branch was instrumental in arranging some of the loans.
Bailey said the FCA's use of criminal powers focussed on sources of money, such as money-laundering.
"As far as we can tell for this case, it's about the use of money," Bailey said.
Mozambique, one of the most indebted countries in the world, admitted in 2016 to undisclosed borrowing, prompting the International Monetary Fund and foreign donors to cut off support, triggering a currency collapse and a default on its sovereign debt.
It is still struggling to overcome the resulting debt crisis. (Reporting by Huw Jones and Karin Strokecker, Editing by Mark Potter)