Credit Suisse AML Lawsuit Will Determine Future of Swiss Banking Rules

The trial of Credit Suisse in a Switzerland court for allowing a Bulgarian drug trafficker to launder illicitly gained money started on Monday. It is the first criminal trial of a Swiss bank and the fate of the case will have a major impact on the way Swiss regulators see the banking industry.

The prosecutors are seeking a monetary penalty of around 42.4 million Swiss francs ($45 million) from Credit Suisse, but the bank is adamant of no wrongdoings on its part.

Drug Money

The 500-pages indictment submitted to the court has named a former Credit Suisse relationship manager for not taking the necessary anti-money laundering steps while handling the money of the former Bulgarian wrestler Evelin Banev and multiple associates.

Banev was convicted for drug trafficking in Italy in 2017 and then for money laundering in Bulgaria in 2018. He was arrested in Ukraine last September. But, he was not named in the Swiss prosecutor’s indictments.

Apart from the ex-Credit Suisse employee, the original indictment named two of Banev’s associates, while a second indictment named a former associate Julius Bear, a relationship manager for facilitating money laundering. However, Julius Bear was not named in the case as the bank refused to accept deposits from the defendants, according to the indictments.

No AML Checks

Credit Suisse has been accused of taking cash deposits from Banev’s associates, which are alleged to come from drug money, between 2004 and 2008. The bank received suitcases full of cash in deposit boxes.

The prosecutors pointed out that it was a standard practice of smurfing, the process of breaking large sums of money into smaller amounts below the limits of anti-money laundering checks.

The alleged drug trafficking associate was shot dead in Bulgaria in 2005, but the Credit Suisse employee was detained for two weeks in 2009. She left the bank in 2010.

She has been charged for concealing the origin of more than 146 million Swiss francs, out of which 43 million Swiss francs were in cash.

Not Guilty

However, the bank denied all the allegations. It said that the bank and its employee followed all standard anti-money laundering practices at the time and disputed the illegal origin of the money. According to Reuters, the bank claims that the money was generated from Banev’s legitimate businesses in construction, leasing and hotels.

Interestingly, Bulgaria was considered a high-risk country when those deposits at Credit Suisse were made.

“Credit Suisse unreservedly rejects as meritless all allegations in this legacy matter raised against it and is convinced that its former employee is innocent,” the bank said in a statement, adding that it will ‘vigorously’ defend itself in court.

“Our client is being unfairly accused because Swiss law requires that a person be implicated in order to condemn a bank,” the attorney of the ex-Credit Suisse employee told Reuters. “She is innocent, outraged by the accusations. We will plead for her full and complete acquittal.”

She will testify in court on Wednesday or Thursday.