Credit Suisse found guilty in cocaine cash laundering case

By Paul Carrel

BELLINZONA, Switzerland (Reuters) – Credit score Suisse was convicted by Switzerland’s Federal Felony Courtroom on Monday of failing to stop money-laundering by a Bulgarian cocaine trafficking gang within the nation’s first legal trial of certainly one of its main banks.

A former worker was discovered responsible of money-laundering within the trial, which included testimony on murders and money stuffed into suitcases and is seen as a check case for prosecutors taking a more durable line towards the nation’s banks.

The ruling marks one other headache for Switzerland’s second-biggest financial institution, which has been reeling from billions in losses racked up by way of risk-management and compliance blunders.

Federal prosecutor Alice de Chambrier welcomed the decision as “good for transparency”.

Each Credit score Suisse and the previous worker had denied wrongdoing.

Credit score Suisse mentioned it could enchantment towards the conviction.

The judges checked out whether or not Credit score Suisse and the previous worker did sufficient to stop the cocaine trafficking gang from laundering income by way of the financial institution from 2004 to 2008.

The courtroom mentioned on Monday it discovered deficiencies inside Credit score Suisse each with regard to the administration of consumer relations with the legal organisation and with regard to the monitoring of the implementation anti-money laundering guidelines.

“These deficiencies enabled the withdrawal of the legal organisation’s belongings, which was the idea for the conviction of the financial institution’s former worker for certified cash laundering,” the courtroom mentioned.

“The corporate might have prevented the infringement if it had fulfilled its organisational obligations,” the presiding choose mentioned in handing down the decision, including that the previous worker’s superiors had been “passive”.

Credit score Suisse mentioned the case arose from a investigation that dated again greater than 14 years.

“Credit score Suisse is repeatedly testing its anti-money laundering framework and has been strengthening it over time, in accordance with evolving regulatory requirements,” the financial institution mentioned.

“Producing compliant enterprise progress consistent with authorized and regulatory necessities is essential for Credit score Suisse.”

Credit score Suisse was fined 2 million Swiss francs ($2.1 million). The courtroom additionally ordered the confiscation of belongings price greater than 12 million francs that the drug gang held in accounts at Credit score Suisse, and ordered the financial institution to relinquish greater than 19 million francs — the quantity that might not be confiscated as a result of inner deficiencies at Credit score Suisse.

The courtroom handed the previous worker, who can’t be named below Swiss privateness legal guidelines, a suspended 20-month jail sentence and a advantageous for cash laundering.

The presiding choose mentioned she had did not fulfil her position within the financial institution’s “first line of defence”.

The previous banker’s lawyer mentioned she would enchantment towards the “unfounded and unfair choice”, noting she had not made any monetary acquire.

“This judgment locations the accountability for cash laundering on individuals with none severe coaching or expertise,” her lawyer mentioned.

Credit score Suisse shares closed up 0.4%, whereas the European banking sector index rose 0.3%. They’re down greater than 40% previously yr.

LEGAL ACTION

Corruption and cash laundering consultants had mentioned the truth that Switzerland had taken authorized motion towards a worldwide banking participant like Credit score Suisse might ship a strong message in a rustic well-known for its banking business.

“This has the potential to be a watershed second for Switzerland,” Mark Pieth, a cash laundering professional on the College of Basel, mentioned on the eve of the trial.

“What is critical about this case is that Switzerland is taking authorized motion towards an organization and never simply any firm – Credit score Suisse is without doubt one of the jewels within the Swiss crown.”

Swiss non-public banks have adopted more durable anti-money laundering checks after a world regulatory crackdown to stop cash laundering.

Below Swiss regulation, an organization could be held answerable for insufficient organisation or failing to take all affordable measures to stop against the law from occurring.

Within the Credit score Suisse case, prosecutors alleged the previous relationship supervisor helped to hide the legal origins of cash for shoppers by way of greater than 146 million Swiss francs in transactions, together with 43 million francs in money, a few of it stuffed into suitcases.

The connection supervisor, who left Credit score Suisse in 2010, was not within the courtroom on Monday.

Throughout courtroom hearings in February, the previous relationship supervisor mentioned Credit score Suisse realized of murders and cocaine smuggling allegedly related to the Bulgarian gang however continued to handle money that turned the main focus of the trial.

The previous banker mentioned throughout the hearings she knowledgeable her managers about occasions, together with two murders, related to the shoppers, however that they determined to pursue the enterprise nonetheless.

Credit score Suisse has disputed the unlawful origin of the cash, saying {that a} former Bulgarian wrestler and his circle operated authentic companies in building, leasing and lodges.

($1 = 0.9594 Swiss francs)

(Reporting by Paul Carrel, Extra reporting by Brenna Hughes Neghaiwi and John O’Donnell; Modifying by Michael Shields and Jane Merriman)