Credit Suisse Busted By Feds In Cocaine and Cash Laundering Scheme

By - June 30, 2022
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Credit Suisse was convicted last week by the Federal Criminal Court in Switzerland for failing to stop money laundering in the nation’s first criminal trials of one of its large banks.

A former Credit Suisse worker was found guilty of money laundering in last week’s trial. The case involved testimony about murders and large amounts of cash put into suitcases and is being seen as a test case for federal prosecutors to get more aggressive against Swiss banks.

The cocaine and money laundering case is another legal headache for Thomas Gottstein who is the CEO of Credit Suisse. The company has been reeling from tens of billions in losses that it had in various compliance and risk-management problems.

So far, the bank and the employee have denied they did anything wrong. Credit Suisse reports that it will appeal the conviction.

Judges Looked At If The Bank Did Enough To Stop Cocaine Trafficking Scheme

The judges on the Credit Suisse case looked at if the bank and the employee did their best to stop a Bulgarian cocaine trafficking gang from doing money laundering of profits through the bank between 2004 and 2008.

The Swiss court stated last week that it found several weaknesses within the bank’s systems regarding how it managed clients with the criminal enterprise and regarding monitoring how the anti-money laundering rules are being implemented.

The deficiencies in the bank’s systems allowed the criminal organization to withdraw its assets more easily. That was the basis for Credit Suisse employee to be convicted for a form of money laundering.

The court added that the company could have stopped the problem if it had done its legal obligations as a bank. The judge added that the employee being charged was passive in terms of his duties to monitor the money laundering that was going on.

Credit Suisse Said The Money Laundering Case Was From 2008

Credit Suisse testified in court that the money laundering case went back more than 14 years. It added that the bank is regularly testing its ability to monitor money laundering operations and has been getting better with it over time.

Credit Suisse is facing a minimum fine of 2 million Swiss francs, which is about $2 million. The court also said it would confiscate assets that were worth at least 12 million francs that the drug gang had in bank accounts at Credit Suisse. It also ordered the bank to give up at least 19 million francs. This was the amount that could not be taken because of the internal issues at Credit Suisse.

The Swiss court gave the ex-employee, who cannot be named due to Swiss privacy laws, a prison sentence of 20 months but it was suspended. He also got a fine for the money laundering.

The judge in the case said the worker had not fulfilled her job as the first line of defense to prevent money laundering.

Switzerland Taking Action Against Credit Suisse Sends A Message, Experts Say

Money laundering and corruption experts contend that Switzerland taking strong action against a major bank like Credit Suisse is sending a strong message in a nation well-known for its banking prowess.

Some authorities in finance and money laundering say this case could be a major precedent for the Swiss banking industry. What’s a big deal is the country is taking legal action against one of the most highly-regarded banks in the country. A strong message is being sent to other banks and financial institutions to play by the rules and do their jobs.

Swiss banks now have tougher laws to fight money laundering after there was an international effort to crack down on this criminal activity. Other analysts also say the case may send a message in Switzerland that it is cracking down on illegal activities such as money laundering. This could send a signal to criminal organizations to send their illegal money to other banks in other countries.

According to Swiss law, a firm can be held liable for poor organization and controls to stop a financial crime from occurring. This exposes the bank to criminal liability that could include jail time and heavy fines.

In the Credit Suisse situation, federal prosecutors said the former employee tried to hide the criminal origins of the money for several clients, amounting to more than 146 million Swiss francs. This also included 43 million francs that were in cash and stuffed in several suitcases.

The former employee left the bank in 2010 and was not in court last week. During the hearings in February, the former worker said Credit Suisse found out about cocaine smuggling and murders that were allegedly related to a Bulgarian gang. But it kept managing the money that is the focus of the case today.

The former banker told the court that she told her managers about these sketchy events, including the two murders, but the bank decided to go after the business anyway. Under the current Swiss rules, continuing to pursue business under questionable circumstances could lead to problems for them down the line.

However, Credit Suisse disputes the illegal origins of the money. They say a former Bulgarian wrestler and his team operated legitimate construction businesses.

The bank also said that it is regularly testing its anti-money laundering systems and has been making them stronger over the years, as regulatory standards change.

Attorney Geoffrey G. Nathan

About Geoffrey Nathan, Esq

Geoffrey Nathan is a licensed attorney in the Commonwealth of Massachusetts since 1988, admitted to practice in both Federal and State courts. He is a Boston criminal defense attorney with over 25 years of experience in felony, federal, and white-collar crimes. Board of Bar Overseers Number #552110