“Suitcases Full Of Drug Money”: Credit Suisse Found Criminally Guilty in Money-Laundering Case Tied to Cocaine Ring

Another day, another dismal development for the 2nd largest (but most damned) Swiss bank.

On Monday, Credit Suisse Group was convicted of failing to prevent money laundering by a Bulgarian cocaine trafficker, in the first ever criminal conviction of a major Swiss bank in the country’s history. The verdict, in which a former relationship manager at the bank was also convicted on money laundering charges, was handed down by Switzerland’s top criminal court on Monday afternoon.

The former employee, who prosecutors said regularly accepted suitcases of cash from one of the ring members that went beyond allowed limits, was given a 20-month suspended sentence. A person from another bank and two members of the crime ring were also found guilty of money-laundering charges. 

There was a silver lining, as the penalty was purely token: Credit Suisse will be fined two million Swiss francs ($2.1 million) over “certain historical organizational inadequacies”,  or about how much the cocaine trafficker spent on hookers in one trip to Switzerland to deposit his drug money with Credit Suisse.

Money aside, the decision is another blow to the tarnished reputation of Credit Suisse, which had argued the crimes date to an era when compliance standards were less stringent. It has been struggling with a series of scandals that have sent its shares to near-record lows, and may face a second criminal indictment in an unrelated case later this year.

As Bloomberg notes, the case was criticized by Credit Suisse for having been brought so many years after the events in question. The bank expressed its “astonishment” in late 2020 when Swiss prosecutors publicly charged it with money laundering offenses, given the alleged crimes took place between 2004 and 2008.

The court said Credit Suisse made it possible for the crime ring to launder money through the bank between July 2007 and December 2008 by failing to adequately monitor its accounts and make sure the business complied with anti-money-laundering rules. The crime ring allegedly recruited a Bulgarian wrestler and others in his orbit for operations transporting drugs and laundering money.

Credit Suisse said in a pre-trial statement that it “unreservedly rejects as meritless all allegations in this legacy matter raised against it and is convinced that its former employee is innocent.” It also said previously that outside lawyers and consultants had reviewed its systems against money laundering and found its organizational setup was “correct and appropriate” in the period being probed.

Prosecutors initially charged the bank with deficiencies between 2004 and 2008 but had to narrow the time frame because too much time had passed. Under Swiss law, local prosecutors can press criminal charges against banks if they believe those institutions didn’t do enough to screen clients and their cash for obvious ties to illicit activity. The former Credit Suisse manager, a woman who can only be named as E. under Swiss reporting restrictions, accepted deposits of used bank notes that regularly exceeded 500,000 euros ($528,650) at a time, according to the 515-page indictment.

Cash deposits were very common given the parlous state of Bulgaria’s banks at the time, she said in testimony. Her lawyer also said she wasn’t sufficiently trained by the bank, and will appeal.

The conviction hits Credit Suisse as it tries to turn a corner on financial losses and other scandals, including more than $5 billion in losses related to the collapse of family office Archegos Capital Management. 

Credit Suisse said it would appeal the decision. It noted that the alleged offenses date to more than 14 years ago. It had said it was astonished to be charged when prosecutors brought the case in December 2020. The bank on Monday said it is continually testing its anti-money-laundering framework and has been strengthening it over time. 

On Tuesday, Credit Suisse will update investors on plans to cut costs this year to help offset falling revenue in some divisions. It previously said it expects to post its third consecutive quarterly loss for the three months ending June 30.