UBS is fighting to break away from Credit Suisse’s money laundering past

UBS has failed in its attempt to halt the appeal against money laundering linked to the Bulgarian mafia, which is currently being investigated by the Swiss Federal Criminal Court in Bellinzona. The bank is now seeking to suspend the proceedings until the Federal Supreme Court makes a final decision.

The ‘Bulgarian Connection’ case is a legacy problem of Credit Suisse (CS), which UBS is keen to resolve. In June 2022, the Tribunal convicted Penal Federal in Bellinzona CS and imposed a fine of 2 million francs for failures in dealing with its clients with a criminal organization and failure to enforce anti-money laundering rules.

At the beginning of the appeal procedure, UBS filed a motion for suspension, as reported on Tuesday by the news agency ‘SDA’. The bank argued that the proceedings should be stayed until the Federal High Court has made a final ruling on its request to close the case.

UBS: no legal basis

One of UBS’s lawyers argued at the start of the trial that there was no legal basis for the transfer of liability. He reminded the court that the Swiss Federal Council had approved the takeover of CS to protect the Swiss financial sector. The case concerns events that took place 17 years ago at another bank under different leadership. UBS insists that the proceedings should be stayed until the Federal Supreme Court rules on its request to dismiss the case.

Court sees legal follow-up via merger agreement

The Federal Criminal Court rejected UBS’s argument in its September ruling, pointing to the merger agreement between the two major banks. The agreement includes not only the transfer of capital, buildings and personnel, but also the legal status of CS in all judicial, arbitration and administrative proceedings.

The case revolves around the relationship between a former CS employee and the Bulgarian mafia, involving drug trafficking and money laundering. Both CS, the company and the ex-employee were found guilty. In addition to a fine, the court ordered the confiscation of assets worth more than 12 million francs, and CS was hit with a damages claim of more than 19 million francs for funds that were out of reach.