Switzerland’s Federal Criminal Court found Credit Suisse and a former employee guilty of not being able to prevent money laundering in what is the country’s first criminal trial of one of its biggest banks.
The trial, which included testimony about deaths and cash stashed into bags, is considered as a litmus test for prosecutors considering a harder stance against the country’s institutions.
From 2004 through 2008, the judges considered whether Credit Suisse and the former employee did enough to prevent an alleged Bulgarian cocaine trafficking ring from laundering earnings through the bank.
Credit Suisse and the former employee had both denied any misconduct.
The court stated on Monday that it discovered flaws within Credit Suisse in both the management of client relationships with the criminal organisation and the monitoring of anti-money laundering regulation application.
“These deficiencies enabled the withdrawal of the criminal organisation’s assets, which was the basis for the conviction of the bank’s former employee for qualified money laundering,” the court said.
Credit Suisse faces a penalties of $2.1 million in Swiss francs.
The former employee, who cannot be identified due to Swiss privacy regulations, received a suspended 20-month prison sentence and a fine for money laundering.
Credit Suisse said it would appeal the conviction, which it claimed was the result of a 14-year inquiry.
“Credit Suisse is continuously testing its anti-money laundering framework and has been strengthening it over time, in accordance with evolving regulatory standards,” the bank said. “Generating compliant business growth in line with legal and regulatory requirements is key for Credit Suisse.”
According to specialists in corruption and money laundering, the fact that Switzerland has initiated legal action against a worldwide banking player like Credit Suisse may send a strong message in a country known for its banking industry.
“This has the potential to be a watershed moment for Switzerland,” Mark Pieth, a money-laundering expert at the University of Basel, said on the eve of the trial.
“What is significant about this case is that Switzerland is taking legal action against a company and not just any company – Credit Suisse is one of the jewels in the Swiss crown.”
Following an international regulatory push to prevent money laundering, Swiss private banks have implemented tighter anti-money laundering measures.
Nonetheless, Switzerland has enormous loopholes in money laundering prevention, according to Marc Herkenrath, deputy director of Transparency International in Switzerland.
According to Swiss law, a firm can be held accountable for insufficient organisation or failure to take all necessary precautions to prevent a crime from occurring, exposing it to criminal culpability.
Prosecutors in the Credit Suisse case said that the former relationship manager assisted clients in concealing the unlawful origins of money through more than 146 million Swiss francs in transactions, including 43 million francs in cash, some of which was stuffed into luggage.
The former Credit Suisse relationship manager was not present in court on Monday.
During court hearings in February, the former relationship manager said that Credit Suisse was aware of killings and cocaine smuggling allegedly linked to a Bulgarian gang but continued to manage the cash that is now at the centre of the trial.
During the hearings, the former banker stated that she alerted her superiors about occurrences involving the clients, including two killings, but that they still decided to pursue the company. Credit Suisse has contested the money’s unlawful origins, claiming that former Bulgarian wrestler Banev and his associates ran legitimate enterprises in building, leasing, and hotels.
(Adapted from BusinessToday.in)