Court Orders Banks to Focus on Individual Employees in Money Laundering Cases

In a recent decision, the Swiss Supreme Court has emphasized the importance of examining the intentional conduct of specific bank employees rather than the bank’s overall conduct when it comes to money laundering cases. The court stressed that these employees must fall within the limited circle of individuals listed in Article 29 of the Swiss Civil Code (SCC), typically those with supervisory positions and decision-making authority.

Identifying Individual Employees

The challenge lies in identifying such employee(s) and proving that they committed an act of money laundering wilfully or recklessly, in violation of anti-money laundering laws and regulations. This requires a thorough investigation to uncover the scope of the fraud and identify the individuals involved.

Internal Bank Fraud: Detection and Investigation

When internal bank fraud is discovered, banks typically initiate an internal investigation to assess the extent of the fraud and identify those responsible. If the investigation confirms the occurrence of fraud, the bank may file a criminal complaint against its employee(s) and claim plaintiff status. In addition, the bank must report the incident to FINMA, which may appoint an investigating agent and open enforcement proceedings to investigate suspected breaches of regulatory and anti-money laundering laws.

Challenges for Clients

In cases where clients are affected by internal bank fraud, they often face difficulties in obtaining a clear explanation from the bank about the fraudulent activities that occurred in their account. In some instances, banks may indemnify their clients without discussion, but this is rare. More commonly, the bank will argue that it is the victim of its own employee and contend that the client’s lack of diligence allowed the rogue banker to continue the fraud.

Practical Considerations

Once urgent actions have been taken to challenge the transactions/operations on affected accounts, clients’ counsel should establish a strategy to build up the case and obtain compensation for damages. This may involve gathering information from various sources, including:

• The bank itself
• Criminal proceedings
• FINMA’s enforcement proceedings

FINMA’s analysis can be particularly useful in establishing critical aspects of the fraud, such as repeated deficiencies in the bank’s monitoring and risk management practices. In one notable case, a 270-page report by FINMA highlighted repeated warning signs that Credit Suisse AG received but failed to address.

Global Recovery Strategies

Large fraud cases often involve multiple jurisdictions, making it essential for lawyers from each jurisdiction to collaborate and establish a global strategy to maximize recovery chances. This may involve:

• Analyzing the advantages of each jurisdiction for the claimant
• Pushing the bank out of its comfort zone

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