By Brenna Hughes Neghaiwi and John O’Donnell
ZURICH – Swiss judges are set to rule on Monday whether Credit Suisse failed to prevent money laundering linked to an alleged cocaine trafficking gang in Switzerland’s first criminal trial of one of its major banks.
Credit Suisse and one of its former employees face charges of allowing an alleged Bulgarian cocaine trafficking gang to launder millions of euros from 2004 to 2008.
The case – which included testimony on murders and cash stuffed into suitcases – centres on relationships that Credit Suisse and its ex-employee had with former Bulgarian wrestler Evelin Banev and multiple associates, two of whom are also charged in the case.
Switzerland’s second biggest bank, when asked for comment, reiterated that it rejected all the allegations as meritless and said there was no wrongdoing by its former employee.
The case is being followed closely in Switzerland, where it is seen as a test for prosecutors taking a potentially tougher line against the country’s banks.
Corruption and money laundering experts said the fact that Switzerland had taken legal action against a global banking player like Credit Suisse could send a powerful message in a country famous for its banking industry.
“This has the potential to be a watershed moment for Switzerland,” Mark Pieth, a money laundering expert at the University of Basel, said.
“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.”
Swiss private banks have adopted tougher anti-money laundering checks after an international regulatory crackdown to prevent money laundering.
Nonetheless, Switzerland still has massive gaps in the prevention of money laundering, Marc Herkenrath, Deputy Director of Transparency International in Switzerland, said.
Under Swiss laws, a company can be held liable for inadequate organisation or failing to take all reasonable measures to prevent a crime from happening, exposing it to criminal liability.
“Even though Swiss law makes it possible to hold a company to account for wrongdoing there have been very few court convictions. This case is significant and sends a powerful signal to other Swiss banks,” Herkenrath said.
In the court case, Swiss prosecutors are seeking around 42.4 million Swiss francs ($45.86 million) in compensation from Credit Suisse.
State prosecutors allege the former relationship manager, who left Credit Suisse in 2010, helped to conceal the criminal origins of money for clients through more than 146 million Swiss francs in transactions, including 43 million francs in cash, some of it stuffed into suitcases.
The former relationship manager, whose identity cannot be reported under Swiss privacy rules, denies wrongdoing.
During court hearings in February, the former relationship manager said Credit Suisse learned of murders and cocaine smuggling allegedly connected to a Bulgarian gang but continued to manage cash that is now the focus of the trial at Switzerland’s Federal Criminal Court.
The former banker said during the hearings she informed her managers about events, including two murders, associated with the clients, but that they decided to pursue the business nonetheless.
Credit Suisse has disputed the illegal origin of the money, saying that former Bulgarian wrestler Banev and his circle operated legitimate businesses in construction, leasing and hotels.
Banev is not facing charges in Switzerland but was convicted in Italy of drug trafficking in 2017 and in Bulgaria in 2018 for money laundering. He was arrested in September in Ukraine as countries including Bulgaria and Romania sought his arrest.
An attorney for Banev in Sofia declined to comment.
Banev’s attorney in February said he denied any involvement in money laundering through Credit Suisse.