By Brenna Hughes Neghaiwi and Silke Koltrowitz
ZURICH (Reuters) – Credit Suisse will face charges in a Swiss court on Monday for allowing an alleged Bulgarian cocaine trafficking gang to launder millions of euros, some stuffed in suitcases.
Swiss prosecutors say the country’s second-largest bank and one of its former client advisors failed to take all the necessary steps to stop the suspected drug dealers from hiding and laundering money between 2004 and 2008.
“Credit Suisse unreservedly rejects as unfounded all allegations made against it in this legacy matter and believes its former employee is innocent,” the bank said in a statement to Reuters.
In the first criminal proceedings against a major bank in Switzerland, the public prosecutor’s office is demanding around 42.4 million francs in damages from Credit Suisse, which will “resist vehemently in court”.
The case has sparked widespread interest in Switzerland, where it is seen as a test of possible tougher action by prosecutors against the country’s banks.
The indictment runs to more than 500 pages and focuses on relationships Credit Suisse and its former employee had with former Bulgarian wrestler Evelin Banev and several employees, two of whom are accused in the case. A second charge in the case accuses a former Julius Baer client advisor of being an accessory to money laundering.
A legal representative for the former Credit Suisse employee, who cannot be named under Swiss data protection laws, said the case was unjustified and his client denied wrongdoing.
A lawyer for the two suspected gang members, who are charged in Swiss federal court with multiple embezzlement, fraud and forgery of documents but cannot be named under Swiss data protection laws, declined to comment. A lawyer for the former Julius Baer client advisor did not respond to requests for comment.
Banev, who has not been charged in Switzerland, was found guilty of drug trafficking in Italy in 2017 and in Bulgaria in 2018 because he was part of a criminal organization active in trafficking tons of cocaine from Latin America.
He disappeared but was arrested in September in Ukraine, where Bulgarian prosecutors are seeking his extradition on charges of founding an organized crime group and drug trafficking, Interpol’s Red List of Wanted Persons shows.
Banev and his legal representatives could not be reached for comment. A lawyer who represented Banev in his Bulgarian trial said she was no longer representing him.
Julius Baer, who is not charged, declined to comment on the case.
CASH IN CASES
The former Credit Suisse employee brought at least one Bulgarian client associated with Banev with her when she joined Credit Suisse in 2004, prosecutors allege in the indictment.
The customer, who was shot dead with his wife in 2005 when leaving a restaurant in Sofia, Bulgaria, began depositing suitcases full of cash in a Credit Suisse safe deposit box, according to the indictment.
Prosecutors accuse the gang of using so-called smurfing, where a large sum of money is broken up into smaller amounts that are below the money laundering warning threshold, to launder money and deposit millions of euros in loose change in safe deposit boxes and later transferred to accounts.
Although Swiss private banks have now introduced much stricter know-your-client checks to combat money laundering, following international pressure, the defendants said that this was common practice at the time of the deposits.
Prosecutors accuse the former client advisor, who left Credit Suisse in 2010 after being in police custody for two weeks in 2009, of having contributed to the criminal background through transactions worth more than CHF 146 million, of which CHF 43 million of funds for customers to disguise francs in cash.
“Our client is wrongly accused because Swiss law requires a person to be implicated in order to convict a bank,” lawyers from law firm MANGEAT LLC, representing the former employee, told Reuters. “She is innocent, outraged by the allegations. We will plead for her full and complete acquittal.”
Credit Suisse denies the illegal origin of the money, a source familiar with their thinking told Reuters, saying Banev and his circle ran legitimate businesses in construction, leasing and hotels.
The Swiss bank, which the indictment said Bulgaria was considered a high-risk country at the time, plans to draw attention to calls by its compliance department to Swiss prosecutors after Banev’s temporary arrest in Bulgaria in April 2007, the source added.
Credit Suisse hopes the court will see the move by its compliance department as a sign that the bank is taking its anti-money laundering obligations seriously and is cooperating with prosecutors on 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.
Noticing a spate of withdrawals, the bank’s compliance department asked prosecutors if they should freeze the accounts, but was told not to do so to avoid betraying customers, according to the source.
By the time prosecutors gave Credit Suisse the green light, most of the money had been withdrawn.
Prosecutors declined to comment on Friday, saying the matter is now in the hands of the court.
The second indictment by federal prosecutors against the former Julius Baer client advisor, charged in the same court case, alleges that some of the funds were transferred to another Swiss bank.
The former customer advisor, who left a few months after the transfers, is accused of aiding and abetting money laundering.
According to the indictment, the bank refused to accept a suitcase filled with cash from the accused.
(Reporting by Brenna Hughes Neghaiwi and Silke Koltrowitz; Additional reporting by Tsvetelia Tsolova; Editing by Alexander Smith)