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Credit Suisse: global media attention on prosecution in Switzerland misses the point.

It's been a long time coming - a major bank is subject to criminal prosecution in its home jurisdiction for money laundering.

Or so the hundreds, if not thousands, of headlines say.

But the attention is misplaced because the bank is not charged with money laundering, but - as has happened so often in the past - a money laundering related offence.

Credit Suisse, often the target of the authorities in the USA, has - one might say belatedly - drawn the attention of the authorities in Switzerland.

First a couple of salient facts: the case is in a Swiss federal criminal court. It is not a regulatory action. Secondly, the facts in issue are - in financial crime terms - ancient history: it relates to moneys that, prosecutors say, passed through the bank between 2004 and 2008.

The allegations relate to serious matters: the Attorney-General's case is that, left high and dry by the collapse of communism, Bulgarian (in particular) sportsmen were approached by organised crime gangs and offered substantial sums of money to take part in criminal activity, including international drugs smuggling, and laundering the proceeds. The official regulator's notice of the proceedings uses the delightful description of the drugs offences as "le trafic international de stupéfiants." That is so elegant that we should adopt it into English, perhaps.

It is alleged that a bank officer was recruited by the criminals to bypass counter-money laundering controls, including the deposit of substantial amounts in small denomination loans. It is alleged that in one operation alone a Bulgarian wrestler transported more than CHF4 million in such notes in his car, driving from Barcelona to Switzerland. Money was used, it is alleged, to purchase property in both Switzerland and Bulgaria.

Prosecutors are seeking a fine which, under Swiss law is a paltry CHF5 million or thereabouts. Surrender of profits might also be ordered: the question of what is profit will fall to the court to decide. The total money at issue is said to be around CHF45 million in "compensation" but exactly how that is made up is a mystery: some CHF37 m is under one head and then there's a claim for more "additional compensation" for reasons as yet not made public.

The bank is charged with offences of a regulatory nature i.e. that it failed to undertake effective know your customer information and to identify the source of funds passing through the bank.

So, it is not charged with money laundering per se. It is charged with administrative, regulatory, failures.

Just like so many other banks over the years.

So, despite all the fuss in the media, the reality is this: aside from noting it, move along: there's nothing significant to see here.

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Author: 
World Money Lau...