Credit Suisse was convicted by the Federal Criminal Court on Switzerland of failing to prevent a Bulgarian cocaine trafficking organization from laundering money through its account. This was the first criminal trial of a bank in the notoriously privacy conscious nation, and the conviction may herald a new era in Swiss banking secrecy, or rather the lack of it.
The trial examined the role of the bank and an employee, and whether they did enough to prevent the cocaine trafficking gang from laundering their money through the bank’s accounts between 2004 and 2008.
The Court said Credit Suisse was deficient in terms of its management of client relations, and with regard to the implementation of anti-money-laundering rules.
The court said, “These deficiencies enabled the withdrawal of the criminal organisation’s assets, which was the basis for the conviction of the bank’s former employee for qualified money laundering. The company could have prevented the infringement if it had fulfilled its organisational obligations.”
Credit Suisse pointed out the case dated back 14 years, and they have implemented more stringent procedures since this case. The bank said, “Credit Suisse is continuously testing its anti-money laundering framework and has been strengthening it over time, in accordance with evolving regulatory standards. Generating compliant business growth in line with legal and regulatory requirements is key for Credit Suisse.”
The Court fined Credit Suisse 2 million francs, or about US$2.1 million. The courts also ordered that 12 million francs from the accounts of the drug gang be seized, as well as more than 19 million francs more, which represented an amount that was unable to be seized previously due to deficiencies in Credit Suisse’s managing systems. The former banker who handled the gang’s account was handed a 20 month suspended sentence. The former banker’s lawyer promised an appeal.
Credit Suisse shares closed up 0.4%, while the European banking sector index (.SX7P) rose 0.3%.
Some see the ruling, against one of the biggest operators in the Swiss banking sector, as a watershed event in the elimination of banking secrecy.
Mark Pieth, a money laundering expert at the University of Basel, said, “This has the potential to be a watershed moment for Switzerland. What is significant about this case is that Switzerland is taking legal action against a company and not just any company – Credit Suisse is one of the jewels in the Swiss crown.”
