The big bank had numerous organizational shortcomings that enabled an employee to launder money for the Bulgarian drug mafia. This was the decision of the Federal Criminal Court. This is only the second time that a bank has been sentenced in this way. Credit Suisse will appeal.
The Federal Criminal Court in Bellinzona has ruled in the Bulgaria case.
Credit Suisse and a former customer advisor at the bank have been found guilty by the Federal Criminal Court in the widely publicized Bulgaria case. The employee was convicted of qualified money laundering and will receive a conditional prison sentence of 20 months and a conditional fine. She is said to have carried out transactions on behalf of customers between July 2007 and December 2008, although there were clear indications of the criminal origin of the money. The court announced this shortly after the verdict was announced. Credit Suisse immediately announced that it would appeal the verdict.
According to the court, the big bank itself was guilty of numerous shortcomings that made the money laundering of the employee possible in the first place. The deficiencies at Credit Suisse related to the management of the customer relationship with the criminal organization – specifically with leading representatives of a Bulgarian drug mafia – and the monitoring of anti-money laundering regulations by the legal service, compliance and the manager of the customer advisor.
Credit Suisse has to pay a fine of CHF 2 million; In addition, she must pay a further CHF 19 million in the sense of a claim for damages from the court. The authorities could not have collected this sum directly due to the big bank’s internal deficiencies in money laundering prevention.
In each case, the court stayed well below the sentences demanded by the prosecutors and the maximum penalty. It sometimes explained this by saying that the speed-up requirement had been violated and that the time of the crime was very long ago. Many allegations are already statute-barred.
Also convicted of two mafia members and another banker
Credit Suisse and four private individuals had been accused of qualified money laundering in the amount of well over 100 million francs by the federal prosecutor. The big bank is said to have done nothing from 2004 to 2008, also due to organizational shortcomings, to the fact that money from the Bulgarian drug mafia around “cocaine king” Ewelin Banev was laundered through its accounts.
The federal prosecutors wanted to impose a fine of 5 million francs and a compensation claim of 42 million francs on the bank.
In addition to the bank, two suspected members of the Bulgarian drug mafia, a Swiss banker and the CS customer advisor who had helped take care of Banev and his chief financial officer in Zurich at the time were also accused. The two Bulgarians were convicted of involvement in a criminal organization and qualified money laundering. One of them receives a suspended prison sentence of 36 months, the other a suspended prison sentence of 12 months; in addition, both must pay a conditional fine.
The fifth defendant, then an employee of another bank, received a suspended prison sentence of 14 months and a suspended fine for supporting a criminal organization and for money laundering. He is said to have helped wash over 7 million francs.
The verdict is not yet final. The parties have the opportunity to appeal the judgment to the Complaints Chamber of the Federal Criminal Court within ten days. Credit Suisse immediately announced in a statement that it would appeal the verdict. Take note of the court’s decision to impose a fine “due to certain historical organizational deficiencies”.
The bank is continuously testing its anti-money laundering defenses and has strengthened them over time, “in line with ongoing regulatory developments.” In doing so, Credit Suisse is focusing on a factor that was already being discussed before the main hearing: from 2004 to 2008, the legal provisions against money laundering, against which the organizational deficiencies of the bank must be measured, were formulated more laxly than today. For the court, as can be concluded from the judgment, there is no question that Credit Suisse did not meet the claims at the time either.
Long process time
The Bulgaria case was in the spotlight not only because of its unsavory involvement with the drug mafia, but also because of a number of other reasons, such as the length of the proceedings and the action taken against a well-known Swiss bank.
It is certainly very unusual how long the criminal investigation lasted. The procedure was opened in 2008, i.e. 14 years ago. A big bank may easily put up with it, but the long-lasting uncertainty is more difficult for the accused private individuals, especially for the former customer advisor.
The responsibility of the federal prosecutor’s office has changed during this time; In the meantime, attorney Lorenz Erni had negotiated an out-of-court solution with the then federal prosecutor Michael Lauber on behalf of Credit Suisse, but no result could be reached.
Early in the main hearing, the Federal Criminal Court decided that it would only judge actions after February 7, 2007. However, the indictment listed alleged offenses from 2004 to 2008; a large part of the allegations is therefore statute-barred. The prosecutors argued in vain that money laundering was a permanent offense and that the court had to assess all of the incidents.
Only one bank has been convicted so far
The possibility of prosecuting companies under criminal law has existed for almost 20 years. Article 102 of the Criminal Code was an indirect consequence of the Schweizerhalle chemical disaster. So far, however, there have only been convictions in a handful of rather minor cases. However, the federal prosecutor’s office has decided to apply the article more to offending banks.
Last December, Falcon Private Bank (which is in the process of being wound up), which was heavily implicated in the 1MDB scandal involving embezzled Malaysian state funds, was the first bank to be convicted under Article 102 of the Criminal Code. The Federal Criminal Court ruled that you were guilty of qualified unfaithful business management. Organizational deficiencies in the company meant that the money laundering carried out via the bank was not recognized.
It is unfortunate that the trial and the verdict fit seamlessly into a series of scandals at Credit Suisse since 2021, but it is more due to coincidence. after all, the acts accused of the bank are 14 and more years ago. The money laundering regulations have been tightened significantly since then, and the practice of Swiss banks has also improved since then. For the Financial Market Authority (Finma), this case seems to have been settled long ago.