Following a series of scandals and recent legal troubles, Credit Suisse is facing charges in Swiss court in relation to Bulgarian cocaine trafficking money laundering activities.
According to Reuters’ report on this, the Swiss bank and its former managers allowed the laundering of millions of euros between 2004 and 2008 and did not take all the necessary actions to prevent this from happening. This is the first criminal trial of a major bank in Switzerland.
The prosecutors are seeking 2.4 million Swiss francs ($45.86 million) in compensation from the bank.
Drug trafficking money
The 500-page indictment focuses on the relationship between Credit Suisse, its former employee, the former Bulgarian wrestler Evelin Banev and his associates. In a second indictment, a former manager at Julius Baer is charged with facilitating the money laundering.
In 2017, Banev was convicted of drug trafficking in Italy, and in 2018 for money laundering in Bulgaria. After disappearing, he was arrested in Ukraine in September.
According to the indictment, the former Credit Suisse employee brough a Bulgarian customer, who was an associate of Banev. This happened in 2004 and she joined the bank. He is not charged in the Swiss-case.
This customer had started placing suitcases full of cash in a safe deposit box at Credit Suisse. He was later shot dead in 2005.
The prosecutors believe that Banev and his associates used a practice called smurfing. This entails breaking down a large sum of money into smaller amounts, which are below the AML alert threshold. The money is laundered by putting millions of euros in small bills in safety deposit boxes and then transferring them into accounts at a later stage.
This was a common practice at the time in question, however, Swiss private banks have since implemented tougher AML and KYC checks.
Credit Suisse denies the allegations
The bank said in a statement to Reuters that it rejects the allegations and it will defend itself in court. Credit Suisse also maintains that its former employee, who cannot be named under Swiss privacy laws, is innocent.
The prosecutors allege that the former employee of Credit Suisse, helped conceal the illegal activities by carrying out over 146 million Swiss francs in transactions. Representatives of the former employee were outraged saying that the prosecutors need to implicate a person in order to prove wrongdoing of the bank.
Credit Suisse has also disputed the illegal origin of the money since Banev and his associates also operated legitimate businesses in construction, leasing and hotels.
According to Reuters sources, the prosecutors asked the bank for information on Banev and his associates’ accounts in 2007. This was requested from Bulgaria. Credit Suisse then noticed withdrawals but the bank’s compliance department was asked not to freeze the accounts so that its clients are not tipped off.
