On Monday, the Federal Criminal Court in Switzerland found Credit Suisse guilty of failing to prevent a cocaine trafficking gang based in Bulgaria from laundering money. This is the first criminal trial conducted in the country in regard to one of its prominent banks.
The trial found a former employee of Credit Suisse guilty of laundering money, which included the testimony of money stuffed into suitcases and murders. This case was seen as a test for prosecutors who have opted to take a hard stance against the banks in the country.
This ruling brings about another headache for the second-biggest bank in Switzerland, which has already been dealing with the consequences of losses of billions due to compliance mistakes and risk management blunders.
The verdict was welcomed by Alice de Chambrier, the Federal Prosecutor, who said that it was a good thing for ensuring transparency. The former employee and the bank had denied any wrongdoing. The bank further said that the conviction would be appealed.
The court’s decision
The judges in the case had tried to assess if the former employee and Credit Suisse itself had made enough effort to prevent the Bulgarian cocaine trafficking ring from using the bank’s services to launder their money between 2004 and 2008.
On Monday, the court announced that they had identified deficiencies within the bank in its implementation and monitoring of anti-money laundering rules. Likewise, Credit Suisse was also found deficient in managing its client relationship with the criminal operation. According to the court, these deficiencies had allowed the criminal organization to withdraw its assets. This was used for convicting the former employee of Credit Suisse for money laundering.
While handing down the verdict, the presiding judge stated that the infringement could have been prevented if the bank had acted in accordance with its organizational obligations. The judge added that the ‘passive’ stance of the superiors of the former employee had also played a role.
Credit Suisse’s response
According to the bank, the case was filed on the basis of an investigation that had been conducted 14 years earlier. Credit Suisse also asserted that it tests its anti-money laundering protocol regularly and has strengthened it over the years, as regulatory standards have evolved. It said that its goal is to ensure compliance with all regulatory and legal requirements in order to achieve business growth.
A fine of 2 million Swiss francs was imposed against the bank. The court also ordered that over 12 million worth of assets that belong to the criminal organization and are held in the bank’s accounts be seized. Credit Suisse was also ordered to relinquish about 19 million francs, which could not be seized due to the bank’s own internal deficiencies.
In accordance with the privacy laws in Switzerland, the former employee of Credit Suisse cannot be named. But, a fine was imposed on the employee for money laundering, along with a 20-month sentence. According to the presiding judge, the employee had not fulfilled her role as the first line of defense for the bank.