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

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ZURICH, Feb 7 (Reuters) – Credit Suisse will be charged in a Swiss court on Monday with allowing a suspected Bulgarian cocaine gang to launder millions of euros, some of which were stuffed into suitcases.

Swiss prosecutors say the country’s second-largest bank and one of its former relationship managers failed to take all necessary steps to prevent suspected drug traffickers from hiding and laundering money between 2004 and 2008.

“Credit Suisse unreservedly rejects as baseless all allegations in this inheritance case against it and is satisfied that its former employee is innocent,” the bank said in a statement to Reuters.

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In the first criminal trial of a major bank in Switzerland, prosecutors are seeking around 42.4 million Swiss francs in compensation from Credit Suisse , which added that it would “defend itself vigorously before the courts”.

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

The indictment is over 500 pages and focuses on the dealings Credit Suisse and its ex-employee had with former Bulgarian wrestler Evelin Banev and several associates, two of whom are charged in the case. A second indictment in the case accuses a former relationship manager at Julius Baer of facilitating money laundering.

A legal representative for the former Credit Suisse employee, who cannot be named under Swiss privacy laws, said the matter was unwarranted and his client denied any wrongdoing.

A lawyer for the two alleged gang members, who face multiple counts of embezzlement, fraud and falsification of documents in Swiss federal court but who cannot be named under Swiss privacy laws privacy, declined to comment. A lawyer for the former relationship manager at Julius Baer did not respond to requests for comment.

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 organization active in trafficking tons of cocaine from Latin America.

He disappeared, but was arrested in September in Ukraine, from where Bulgarian prosecutors are seeking his extradition to face charges of forming an organized criminal group and drug trafficking, says the red list of people wanted by Interpol.

Banev and his legal representatives could not be reached for comment. A lawyer who represented Banev in his Bulgarian lawsuit said she no longer represents him.

Julius Baer (BAER.S), who is not facing charges, declined to comment on the matter.

MONEY IN CRATES

The former Credit Suisse employee brought at least one Bulgarian client 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, began placing suitcases full of cash in a Credit Suisse safe, the indictment says of accusation.

Prosecutors allege the gang used so-called smurfing, where a large sum of money is broken down into small amounts below the money laundering alert threshold, to launder money, putting millions of euros in small denomination banknotes in safes and then transfer them to accounts.

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

Prosecutors accuse the former relationship manager, who left Credit Suisse in 2010 after being detained for two weeks by police in 2009, of helping to conceal the criminal origins of clients’ money by carrying out more of 146 million Swiss francs in transactions, including 43 million francs in cash.

“Our client is being unfairly accused, as Swiss law requires a person to be implicated to convict a bank,” lawyers from the law firm MANGEAT LLC, representing the ex-employee, told Reuters. “She is innocent, outraged by the charges. We will plead for her full and complete acquittal.”

Credit Suisse disputes the illegal origin of the money, a source familiar with its thinking told Reuters, saying Banev and his entourage operated legitimate businesses in construction, rentals and hospitality.

The Swiss bank, which according to the indictment considered Bulgaria a high-risk country at the time, plans to draw attention to calls made by its compliance department to Swiss prosecutors after the Banev’s temporary arrest in Bulgaria in April 2007, the source added.

Credit Suisse hopes the court will take its compliance department’s decision as a sign that the bank takes its anti-money laundering obligations seriously and is cooperating with prosecutors in the matter.

In June 2007, prosecutors asked Credit Suisse for information about accounts held by Banev and his associates in response to a request from Bulgaria, the source added.

Seeing a series of withdrawals, the bank’s compliance department asked prosecutors whether to freeze the accounts, but were told not to so as not to warn customers, the source said.

By the time prosecutors gave Credit Suisse the green light, much of the money had been withdrawn.

The prosecutor’s office declined to comment on Friday, saying the case was now in the hands of the court.

The second indictment filed by federal prosecutors against the former relationship manager at Julius Baer, ​​who is being tried in the same trial, alleges that part of the funds were transferred to another Swiss bank.

The former relationship manager, who left a few months after the transfers, is accused of facilitating money laundering.

The bank had refused to accept a suitcase full of cash from the defendants, the indictment says.

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Reporting by Brenna Hughes Neghaiwi and Silke Koltrowitz; Additional reporting by Tsvetelia Tsolova; Editing by Alexander Smith

Our standards: The Thomson Reuters Trust Principles.

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