ZURICH – The former head of Gazprombank’s Swiss unit and three colleagues stand trial in Zurich on Wednesday.

They have been charged with failing to raise the alarm over financial transactions made by a cello-playing confidant of Russian President Vladimir Putin. 

The chief of Gazprombank Schweiz, two senior executives at the bank and a client relationship manager neglected to carry out proper due diligence between 2014 and 2016 into Mr Sergei Roldugin’s finances and connections, according to the Zurich prosecutor’s indictment.

Mr Roldugin is a “close friend” of Mr Putin and godfather to his daughter, and the bankers should have scrutinised whether he was the real beneficial owner of Gazprombank accounts belonging to shell companies in Panama and Cyprus, the prosecutors said. 

The four, three of whom are Russian and one Swiss, “continued the business relationship unacceptably, although they themselves had serious doubts about the correctness of the information about the beneficial owner”, according to prosecutors.

They are seeking a seven-month suspended sentence with two years of probation for the men, who cannot be identified under Swiss law.

Lawyers for the four declined to comment. 

For Switzerland, long a hub for rich Russians looking to stash their wealth, the trial is a test of local prosecutors’ willingness and ability to punish what they believe to be financial wrongdoing amid a war that has upended traditional Swiss neutrality.

Foreign critics have argued that Switzerland does not do enough to crack down on financial crime domestically, and sometimes even targets whistle-blowers for prosecution instead of the perpetrators and enablers.

The case also puts the spotlight on the role of Mr Roldugin and others as conduits of the vast fortune that Western governments say Mr Putin accumulated over his nearly quarter-century in power.

The cellist was among those in Mr Putin’s circle that the European Union sanctioned a year ago, after the invasion of Ukraine. 

“Roldugin is responsible for ‘shuffling’ at least US$2 billion (S$2.7 billion) through banks and offshore companies as a part of Putin’s hidden financial network,” the EU said at the time, citing a 2016 report from the International Consortium of Investigative Journalists. 

‘Putin’s custodian’

The US Treasury went further last June, calling Mr Roldugin “a custodian of President Putin’s offshore wealth”.

The Kremlin has previously acknowledged that Mr Putin is a friend of Mr Roldugin, who recognises the work he has done for Russian music, but denies any financial improprieties. 

That 2016 report, known as the Panama Papers, prompted Swiss banking regulator Finma to investigate Gazprombank’s Swiss unit, and it concluded in 2018 that the bank had “serious shortcomings” in the measures it took to combat money laundering.

Gazprombank had failed to carry out adequate economic background checks on its clients, Finma decided at the time, as it prohibited the Swiss bank from accepting new private clients until further notice.

Gazprombank Schweiz began winding down operations last year, in the months after Russian’s invasion of Ukraine. BLOOMBERG