Credit Suisse fined over laundering of Bulgarian cocaine traffickers’ money

Credit Suisse fined over laundering of Bulgarian cocaine traffickers’ money
By Denitsa Koseva in Sofia June 27, 2022

Credit Suisse has been convicted by Switzerland's Federal Criminal Court of failing to prevent the laundering of millions of Swiss francs by a Bulgarian cocaine-trafficking gang, the court said in a statement on June 27.

This is the first big bank group in Switzerland to be convicted of such a crime. A former bank employee was found guilty of money laundering in the trial.

Credit Suisse will be fined CHF2mn (€1.97mn) and the court also ordered the confiscation of assets worth more than CHF12mn that the drug gang held in accounts at Credit Suisse. The bank was also ordered to relinquish more than CHF19mn, which is the amount that could not be confiscated due to internal deficiencies at Credit Suisse, the court said in a statement.

The former employee was sentenced to 20 months in jail and a fine as she failed to prevent the money laundering by not fulfilling her role as the bank's first line of defence.

“The court noted that between July 2007 and December 2008, the former employee of Credit Suisse, as the guardian of the client relationship of the said criminal organisation, executed transfer orders or had them executed on the instructions of the client, although there were concrete suspicions regarding the criminal origin of the funds,” the court said in the statement. Most of these orders concerned international transfers.

“Through these machinations, she contributed to the fact that the criminal organisation was able to hide more than CHF19mn from the control of the state,” the court said.

The court also said it found deficiencies in the bank’s procedures related to the management of customer relations with the criminal organisation and to the monitoring of the implementation of the anti-money laundering rules.

Credit Suisse said that it will appeal the verdict.

The court convicted two Bulgarian nationals of involvement in a criminal organisation and of suspected money laundering committed between May 2005 and January 2009. One of them, resident in Bulgaria, was sentenced to 36 months in jail. The court ruled that he acted as a confidant of the criminal organisation by establishing financial structures designed to disguise the criminal origin of the assets deposited in Switzerland and to give them the appearance of a legal origin.

“To this end, he acted as a middleman between two Swiss banks and several members of the organisation. In addition, he helped them to move the assets abroad in order to remove them from the reach of the judiciary,” the court said.

The second convicted Bulgarian lives in Switzerland. He was sentenced to 12 months in jail and a fine.

“The court concluded that he was involved in the smuggling of assets of the criminal organisation between Spain and Switzerland and acted as the ‘straw man’ of the same by falsely posing as the beneficial owner of a bank account and the owner of a property in Switzerland,” the court said in the statement.

The court also convicted a former employee of another Swiss bank of supporting a criminal organisation and money laundering for helping to launder assets worth more than CHF7mn between July 2007 and November 2008 and for setting up a Swiss holding company intended to take over the organisation's assets.

Prosecutors charged the bank and one of its former relationship managers with not taking all necessary steps to prevent the drug traffickers from hiding and laundering money between 2004 and 2008. The prosecutors claimed in the indictment that Credit Suisse and its former employee were involved with former Bulgarian wrestler Evelin Banev-Brendo and multiple associates, two of whom are also charged in the case.

Banev was convicted of drug trafficking in Italy in 2017 and then in Bulgaria in 2018 for money laundering. He escaped but was arrested in Ukraine in September and Bulgarian prosecutors are seeking his extradition.

In Bulgaria, Banev is also facing charges of having set up an organised criminal group for money laundering, while he is wanted by Romania for setting up a drug trafficking group.

The court confirmed that the former Credit Suisse employee brought at least one Bulgarian customer, who was an associate of Banev, with her when joining the bank in 2004.

The customer had been placing suitcases full of cash in a safe deposit box at Credit Suisse. He was assassinated in Sofia in 2005.

Credit Suisse has disputed the illegal origin of the money, saying that Banev and his circle operated legitimate businesses in construction, leasing and hotels.

Moreover, back in 2007, after Banev was temporarily arrested in Bulgaria, Credit Suisse contacted the Swiss prosecution to check whether it could continue serving this client in accordance with the anti-money laundering regulations.

Subsequently, Credit Suisse asked whether it should freeze Banev’s accounts, but was told not to by local authorities in order to avoid tipping the clients off, Reuters reported, quoting its sources. By the time prosecutors gave Credit Suisse the green light to freeze the accounts, much of the money had been withdrawn.