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A Swiss private banker has been accused of multiple cases of theft, money laundering and fraud and of using client funds to illegally recapitalize the financially troubled lender he worked for.
The individual, whose anonymity is protected by Swiss criminal law, was accused by Swiss prosecutors on Wednesday of taking control of 14 million francs ($15.4 million) in a multi-layered criminal conspiracy that lasted seven years until 2015.
He was a member of the board of directors of a small private bank based in Geneva, whose name was also omitted in the indictment filed in Bellinzona, southern Switzerland.
At the beginning of 2008, the banker allegedly deposited large sums of money at his bank in his own name, while in reality the money belonged to a third party, who wanted to hide its true ownership to protect his wealth from government authorities.
The banker then took advantage of the trust placed in him by his client, the charges laid, and stole the money outright, as well as making large loans to associates, family and friends.
“It is believed that the assets were used primarily to finance the lifestyle enjoyed by the defendant and his family,” the prosecutor said.
The fraud was discovered after Swiss anti-money laundering authorities raised doubts about large transfers made by the banker to businesses in the Dominican Republic. The funds flowing from these businesses to the banker were “of criminal origin”, the prosecutor said.
The case is the latest in a series of scandals that have highlighted the enormous discretion that Swiss bankers and asset managers typically enjoy over their clients’ assets, and the potential for abuse that comes with it.
Despite sweeping changes to Swiss bank secrecy laws and compliance practices over the past decade and a half, the country, the world’s number one hub for offshore wealth, continues to be dogged by a steady drip of scandals.
In several recent cases, cases have come to court showing that serious crimes have gone undetected for years thanks to a culture and system that still favors secrecy and personal relationships.
The banker also allegedly regularly falsified account statements which he passed on to his client, who, as he was also trying to deceive the bank and anti-money laundering authorities, did not double-check the true status of his account.
The prosecutor’s office also said that the banker attempted to use at least 1 million francs of his client’s funds to try to keep his bank afloat. At one point he invested 500,000 francs to help the bank recapitalize the funds and attempted to use another 500,000 francs of the client’s money even after being told that a criminal investigation was underway against him.
The cases of fraud and money laundering reported by prosecutors raise questions about the ability of Swiss regulators to effectively monitor and change business practices at the country’s dozens of banks and more than 950 registered independent asset managers.
In October Swiss banker Benjamin G, a former Julius Baer employee, was found guilty of stealing more than 22 million francs from the savings of an elderly Israeli-Ukrainian couple. He also routinely forged bank statements and was given full power of attorney over his clients’ assets.