Bulgarian criminal organisation: indictment filed against organisation members and Credit Suisse
Bern, 17.12.2020 - 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.
Membership of a criminal organisation
With the end of the communism 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, was then paid into bank accounts in Switzerland controlled by the criminal organisation, at least from 2004 until 2007, and were then fed into legal economic circulation, being used in particular to purchase real estate in Bulgaria and in Switzerland. Between June and September 2007, the criminal organisation worked to conceal the funds of criminal origin in order to protect them from the long arm of the law, in particular by transferring the money abroad and closing accounts and safety deposit boxes linked to the organisation.
The Swiss context to the proceedings
On 1 February 2008, the OAG opened a criminal investigation on suspicion of money laundering (Art. 305bis Swiss Criminal Code SCC) and membership of a criminal organisation (Art. 260ter SCC). The suspects were a Bulgarian wrestler – living in the canton of Valais and working primarily as a labourer – and his employer. Between September 2008 and June 2015, the investigation into suspicions of aggravated money laundering and participation in a criminal organisation was extended to include an ex-employee of a bank – also familiar with the wrestling world –, to the head of the criminal organisation described above, to the latter’s ex-wife (and concubine), to the latter’s sister, to the close Bulgarian confidant and financial adviser of the head of the criminal organisation described above, to another high-ranking member of the organisation, to the latter’s wife, and to a Credit Suisse executive who was in charge of the criminal organisation’s business. Also included were the bank Credit Suisse AG for a violation of Article 305bis numbers 1 and 2 SCC in conjunction with Article 102 SCC, and a former employee of a company in the Credit Suisse Group who had been responsible for setting up the ‘special finance transactions’ and who was also suspected of aggravated money laundering.
In March 2017, the Swiss employer of the Bulgarian wrestler was convicted by summary penalty order of aggravated money laundering. His main offence was committed in February 2006, when he transported the equivalent of more than CHF 4 million in small denomination notes hidden in his coach from Barcelona to Switzerland. In November 2019 and in January 2020, the OAG separated the case against the head of the criminal organisation, the other high-ranking member of the organisation and his wife from the main proceedings, as it had proved impossible to locate the former and the woman and to question the high-ranking member of the organisation at short notice.
On 15 December 2020, the OAG separated the proceedings relating to the former banker – familiar with the wrestling world –, the ex-wife of the head of the criminal organisation and her sister and issued summary penalty orders against them. It also issued an order abandoning proceedings with regard to the allegations against the former employee of a company in the Credit Suisse Group. The OAG ultimately indicted three persons and Credit Suisse AG.
The OAG has filed an indictment in the Criminal Chamber of the Federal Criminal Court in which it charges (i) the close confidant and financial adviser of the head of the organisation, (ii) the former Credit Suisse executive, (iii) the bank Credit Suisse AG and (iv) the Bulgarian wrestler living in Valais.
(i) In order to launder the proceeds of the offences committed by the criminal organisation, the head of the criminal organisation engaged the services of a confidant who could set up and manage the legal and financial structure established primarily in Switzerland, Austria and Cyprus. This ‘man of straw’ also served as a communication channel between the banks in Switzerland and the other members of the organisation and had an overview of the entire laundering process, intervening at all its levels. He is accused, in his capacity as a member of the criminal organisation, of having committed, between October 2004 and January 2009, acts intended to frustrate the identification of the origin and the seizure of funds of criminal origin belonging to and under the control of the organisation amounting an equivalent of more than CHF 80 million.
(ii) From July 2004 to December 2008 at least, the former executive of Credit Suisse AG was responsible for business relations with the criminal organisation. Until 2008, she carried out transactions, or arranged for such transactions to be carried out on the instruction of this client, despite there being strong indications that the funds were of criminal origin, in contravention in particular of her due diligence obligations set out in in the Federal Act on Combating Money Laundering and the Financing of Terrorism (AMLA) and the Federal Banking Commission Ordinance on Combating Money Laundering and the financing of Terrorism (OBA-CFB). The executive also impeded attempts to comply with the obligation to inform the Money Laundering Reporting Office Switzerland (MROS). In addition, she actively assisted the criminal organisation in feeding the equivalent of around CHF 16 million in criminal funds into legal circulation using a ‘back-to-back’ credit structure. By doing this, the executive persistently prevented the identification of the origin, the detection and seizure of funds of criminal origin and thus contributed to concealing the criminal origin of assets held by the criminal organisation by carrying out financial transactions for a value of more than CHF 140 million.
(iii) From July 2004 at least until December 2008, Credit Suisse AG in Zurich failed to comply with its obligation to consolidate or group the business relating to the same holder, beneficial owner or group of beneficial owners and its obligation to assign the same degree of risk to them. In practice, the process of opening and monitoring business relations carried out by the bank’s employees and the checks made by their superiors did not comply with the anti-money-laundering provisions in force or the bank’s internal directives. The employees did not clarify, or at least not sufficiently, the higher risk transactions, and the system of controls conducted both at management level and by the compliance service was flawed. Equally problematic was the fact that the processes of analysis, coordination and communication and freezing bank accounts were dysfunctional and failed to prevent the flight of assets amounting to the equivalent of around CHF 35 million related to the Bulgarian criminal organisation, even after the OAG issued a seizure order in August 2007.
Credit Suisse had been aware of these deficiencies from at least 2004. The fact that the bank let it continue until 2008, or even beyond, impeded or frustrated the detection of the money laundering activities carried out by the criminal organisation with the aid of the bank executive.
(iv) The Bulgarian wrestler living in the Valais is accused of having, from July 2005 to April 2009, committed acts intended to frustrate efforts to identify the origin of and to seize assets amounting to an equivalent of around CHF 7 million.
To summarise the position, Credit Suisse AG in Zurich is thus accused of failing to take all the reasonable organisational measures that were required to prevent the offence of aggravated money laundering (Art. 305bis no. 1 and 2 SCC in conjunction with Art. 102 para. 2 SCC) from being committed by the executive who was responsible for business relations with the criminal organisation.
The three individuals are accused of committing the offence of aggravated money laundering (Art. 305bis no. 1 and 2 SCC). The close confidant of the head of the organisation and the Bulgarian wrestler are further accused of the offences of participation in a criminal organisation under Article 260ter SCC, and of forgery of documents under Article 251 SCC.
Summary penalty orders
The first summary penalty order is issued against a former banker who worked in Geneva as a executive before resigning in the summer of 2007 in order to work full-time for the criminal organisation. The banker is in particular accused of failing to carry out measures as required under the anti-money laundering provisions in force and of having supported the criminal organisation, in particular by taking steps intended to establish a company in Switzerland that would be used to manage the criminal organisation’s assets.
The second and third summary penalty orders are directed against the ex-wife of the head of the criminal organisation and against her sister. The two sisters were involved in the financial and real estate transactions aimed at laundering the criminal organisation’s revenues in Switzerland. In addition, at least from July 2007, the sisters organised the gradual transfer of the criminal organisation’s assets in Switzerland to accounts held abroad where they could be more safely held. By their actions, the sisters prevented the seizure of funds of criminal origin.
As always, the OAG will make its sentencing proposals at the main hearing before the Federal Criminal Court (FCC). As the indictment has now been filed, the court is responsible for providing further information on the case. As always, the presumption of innocence applies to the accused and no further comment will be made on the indictments, the convictions, the case that was abandoned or on proceedings still ongoing in this complex matter.
The OAG has decided not to bring other suspects in this case to court, as it has issued them with summary penalty orders in which it proposes that they be convicted for the offences described above. The persons concerned have 10 days within which to object. If necessary, their cases will be referred to the Federal Criminal Court. However, if they decide not to object, the summary penalty order will come into force and will have the effect of a judgment.
As these summary penalty orders, and the order abandoning proceedings, have yet to take full legal effect, they are currently unavailable for public inspection.
Address for enquiries
Communication Service of the Office of the Attorney General of Switzerland, firstname.lastname@example.org
Office of the Attorney General of Switzerland