Credit Suisse faces money laundering charges in trial of Bulgarian cocaine traffickers

Prosecutors say the bank did not take all necessary steps to prevent the alleged drug traffickers from hiding and laundering cash between 2004 and 2008. PHOTO: AFP

ZURICH (REUTERS) - Credit Suisse will face charges in a Swiss court on Monday (Feb 7) for allowing an alleged Bulgarian cocaine trafficking gang to launder millions of euros, some of it stuffed into suitcases.

Swiss prosecutors say the country's second-biggest bank and one of its former relationship managers did not take all necessary steps to prevent the alleged drug traffickers from hiding and laundering cash between 2004 and 2008.

"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 to Reuters.

In the first criminal trial of a major bank in Switzerland, prosecutors are seeking around 42.4 million Swiss francs (S$61.7 million) in compensation from Credit Suisse, which added that it would "defend itself vigorously in court".

The case has attracted intense interest in Switzerland, where it is seen as a test for a potentially tougher stance by prosecutors against the country's banks.

The indictment runs to more than 500 pages, and centres on relationships that Credit Suisse and its former employee had with former Bulgarian wrestler Evelin Banev and multiple associates, two of whom are charged in the case. A second indictment in the case charges a former relationship manager at Julius Baer with facilitating money laundering.

Banev, who does not face charges in Switzerland, was convicted of drug trafficking in Italy in 2017 and then in Bulgaria in 2018 for being part of a criminal organisation active in trafficking tonnes of cocaine from Latin America.

He vanished, but was arrested in September in Ukraine, from where Bulgarian prosecutors are seeking his extradition to face charges of setting up an organised criminal group and drug trafficking, Interpol's red list of wanted persons shows.

Cash in cases

The former Credit Suisse employee brought at least one Bulgarian customer who was an associate of Banev with her when she joined Credit Suisse in 2004, prosecutors allege in the indictment.

The customer, who was later shot dead as he left a restaurant with his wife in Sofia, Bulgaria in 2005, had begun placing suitcases full of cash in a safe deposit box at Credit Suisse, the indictment says.

Prosecutors allege the gang used so-called smurfing, where a large sum of money is broken down into smaller amounts which are below the anti-money laundering alert threshold, to launder money, putting millions of euros in small-value bills into safety deposit boxes and later transferring them into accounts.

Although Swiss private banks have since adopted much tougher anti-money laundering so-called know-your-client checks after international pressure, the defendants said this was standard practice at the time the deposits were made.

The prosecutors allege the former relationship manager, who left Credit Suisse in 2010 after being detained for two weeks by police in 2009, helped conceal the criminal origins of money for the clients by carrying out more than 146 million Swiss francs in transactions, including 43 million francs in cash.

Credit Suisse disputes the illegal origin of the money, a source familiar with its thinking told Reuters, saying that Banev and his circle operated legitimate businesses in construction, leasing and hotels.

The Swiss bank, which the indictment says considered Bulgaria as a high-risk country at the time, plans to draw attention to calls made by its compliance department to Swiss prosecutors after Banev was temporarily arrested in Bulgaria in April 2007, the source added.

Credit Suisse is hoping that the court will view that its compliance department's move was a sign of the bank taking its anti-money laundering obligations seriously and of cooperating with prosecutors in the matter.

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