Swiss court fines Lombard Odier 3 mln francs over Uzbek money laundering

By: Vidhya Edwards Munnangi | 3 min read

Lombard Odier & Cie has been found guilty and ordered to pay SFr3 million ($3.7 million) after Swiss judges concluded the bank failed to prevent an Uzbek money-laundering network from operating through its Geneva business.

The Swiss Federal Criminal Court also handed a former Lombard Odier relationship manager, identified only as "C." under privacy rules, a two-year suspended prison sentence for his role in the case.

Case Background

The proceedings have run for several years and shifted in April, when the case against Uzbek businesswoman and former diplomat Gulnara Karimova—described as the alleged organizer—was dismissed. Switzerland's highest criminal court ended that case after ruling that Karimova's detention in Uzbekistan made it unlikely she would stand trial in Switzerland, rendering a fair hearing impossible.

Last year, prosecutors brought money-laundering charges against Lombard Odier, alleging the bank lacked adequate safeguards and thereby allowed the concealment of tainted funds linked to "The Office," a structure allegedly created by Karimova.

Court Findings

The court upheld the accusation.

"The bank had evidence suggesting that part of the assets placed in the accounts managed by C. originated from acts of corruption," the court said in its judgment statement.

According to Bloomberg, the judges also stated that the bank's compliance function "did not take sufficient measures to ensure that further enquiries regarding the origin and economic purpose of these funds were conducted and duly documented."

Under Swiss law, companies can face criminal liability if they fail to take adequate steps to prevent money laundering.

Bank's Response

Lombard Odier released a statement saying it "disagrees" with the ruling and plans to appeal.

• "It should be noted that the Office of the Attorney General has never alleged that Lombard Odier knowingly or willfully participated in money laundering," the bank said.
• "As a reminder, the events under review date back more than fifteen years" and "the underlying case began after Lombard Odier proactively reported suspicions to the Swiss authorities in 2012," it added.

Role of the Former Relationship Manager

According to prosecutors, C. had prior links to Karimova and other individuals involved in "The Office" before joining Lombard Odier, through work connected to an investment fund led by Karimova.

After joining the bank in 2008, he maintained those connections and opened nine accounts over the next four years intended to receive money generated by the scheme, the indictment said. Prosecutors alleged that he used fabricated beneficial owners for the accounts and attempted to present one shell company from "The Office" as an independent operating business.

The court stated that C. was prepared to carry out only "superficial checks" on the source of the money and failed "to ascertain the origin and economic purpose of these funds."

C. was convicted of aggravated money laundering and managed approximately $140 million, according to the court.

Asset Confiscation

The judges also ordered the confiscation of more than $400 million in related assets held in Switzerland.

This article was originally created and published by Private Banker International, a GlobalData owned brand.