Credit Suisse Vows To Fight OAG Charges Over Bulgarian Saga

Tom Burroughes Group Editor London 18 December 2020

Credit Suisse Vows To Fight OAG Charges Over Bulgarian Saga

The Zurich-listed bank intends to defend itself "vigorously" over any charges brought against it following the 12-year probe by Switzerland's OAG into alleged failings to prevent money laundering. Credit Suisse said it was shocked by the charges.

Credit Suisse, Switzerland’s second-largest bank, yesterday voiced its “astonishment” at the Office of the Attorney General of Switzerland's move to bring charges against the bank and other parties. 

The OAG has been probing into the bank's activities since February 2008.

The charges relate to a criminal investigation into money laundering linked to a Bulgarian organised crime group allegedly involved in trafficking narcotics. The affair is an example of how events surrounding the end of the former Soviet Union and its satellite states continue to affect today’s financial world.  

The Swiss Federal Criminal Court can impose a maximum fine of SFr5 million ($6.51 million) in such proceedings, the bank said in a statement. Credit Suisse said it “rejects the allegations about supposed organisational deficiencies and intends to defend itself vigorously.”

In its statement, the OAG said: “Following an extensive investigation into the activities in Switzerland of a major Bulgarian criminal organisation involved on a grand scale in the international trafficking of narcotics and in laundering the proceeds of these activities, the Office of the Attorney General of Switzerland (OAG) has filed its indictment in the Federal Criminal Court (FCC).”

“Also indicted is the bank Credit Suisse AG. It is accused of failing to take all the organisational measures that were reasonable and required to prevent the laundering of assets belonging to and under the control of the criminal organisation. A former manager at the bank and two members of the criminal organisation have also been indicted before the FCC,” it said. 

"Credit Suisse is far from alone in having questions raised as regards compliance and anti-money laundering rules. We have seen similar issues raised with other European banks. This is a systemic issue and, as such, requires a systemic response, especially when money can now so easily move across borders. Therefore, any effective regulatory response must be both systemic and transnational. Moreover, all companies, including banks, must be vigilant and ensure that they have rigorous procedures and systems in place, which can identify and deal with suspicious transactions," Bambos Tsiattalou, specialist financial crime lawyer at Stokoe Partnership Solicitors, said. 

Rejection of claims
“Credit Suisse unreservedly rejects as meritless all allegations raised against it and is convinced that its former employee is innocent,” the bank said. “Following lengthy proceedings - during the course of which various allegations were dropped and others became time-barred - the Office of the Attorney General has now brought charges against the bank and one former employee, among other parties, on 17 December 2020, and it has terminated the investigation against the second former employee,” the bank said.

Credit Suisse said “a regulatory deep dive report” on AML issues prepared in 2004 showed that it had complied with the requirements in this field. It said that in 2016, the bank commissioned an independent legal review of the allegations against it by leading experts in the fields of money laundering prevention and banking supervision, including a former divisional manager at FINMA. The experts concluded that Credit Suisse’s anti-money laundering organisational set-up was “correct and appropriate” throughout the period in question.

“To prevail, the Office of the Attorney General of Switzerland would have to prove in court not only that the former employee of the bank is guilty of crimes but also that purported organisational deficiencies at the bank both violated then-applicable requirements and in fact enabled the former employee’s purportedly criminal acts,” Credit Suisse said. “Based on the facts, Credit Suisse expects to prevail when the case is heard by the Swiss Federal Criminal Court.” 

Explaining the background, the OAG said that when communism ended in Bulgaria, top-level athletes, lacking financial support, turned towards other sources of income, and numerous wrestlers received approaches from mafia clans. Since the start of the 2000s - at least until 2012 - one of them built up and managed a hierarchical and compartmentalised criminal structure which aimed to make money for its members by trafficking in cocaine and laundering the proceeds of these activities. During this period, the perpetrator, who has been convicted and sentenced to lengthy prison terms in several European countries (in particular in Italy in 2017 where he was found to be involved in a criminal organisation) arranged for ‘mules’ to transport several tens of tonnes of cocaine from South America to Europe by boat and by plane.

The proceeds from the sale of the narcotics, often in used small denomination euro banknotes, were then paid into bank accounts in Switzerland controlled by the criminal organisation, at least from 2004 until 2007. They were then fed into legal economic circulation, being used in particular to purchase real estate in Bulgaria and in Switzerland.

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