BELLINZONA: Credit Suisse was convicted by Switzerland’s Federal Criminal Court of failing to prevent money-laundering in the country’s first criminal trial of one of its major banks.
A former employee was found guilty of money-laundering in the trial, which included testimony on murders and cash stuffed into suitcases and is seen as a test case for prosecutors taking a tougher line against the country’s banks.
It marks another headache for Switzerland’s second-biggest bank, which has been reeling from billions in losses racked up via risk-management and compliance blunders. Both Credit Suisse and the former employee had denied wrongdoing.
Credit Suisse said it would appeal against the conviction.
The judges looked at whether Credit Suisse and the former employee did enough to prevent a Bulgarian cocaine trafficking gang from laundering profits through the bank from 2004 to 2008.
The court said on Monday it found deficiencies within Credit Suisse both with regard to the management of client relations with the criminal organisation and with regard to the monitoring of the implementation anti-money laundering rules.
“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.
“The company could have prevented the infringement if it had fulfilled its organisational obligations,” the presiding judge said in handing down the verdict, adding that the former employee’s superiors had been “passive”.
Credit Suisse said the case arose from a investigation that dated back more than 14 years.
“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.” Credit Suisse faces a fine of 2 million Swiss francs ($2.1 million). The court also ordered the confiscation of assets worth more than 12 million francs that the drug gang held in accounts at Credit Suisse, and ordered the bank to relinquish more than 19 million francs — the amount that could not be confiscated due to internal deficiencies at Credit Suisse.
The court handed the former employee, who cannot be named under Swiss privacy laws, a suspended 20-month prison sentence and a fine for money laundering. The presiding judge said she had failed to fulfil her role in the bank’s “first line of defence”.
Credit Suisse shares fell 0.7pc by mid-afternoon, lagging a 0.1pc rise in the European banking sector index. They are down more than 40pc in the past year.
Corruption and money laundering experts had said the fact that Switzerland had taken legal action against a global banking player like Credit Suisse could send a powerful message in a country famous for its banking industry.
Published in Dawn, June 28th, 2022