Swiss Prosecutors Indict Lombard Odier for Aggravated Money Laundering

In a rare move against one of Switzerland's oldest and most prominent wealth managers, Swiss prosecutors have charged private bank Lombard Odier and one of its former employees with “aggravated money laundering.” The allegations stem from the bank’s purported role in concealing proceeds from a criminal enterprise allegedly linked to Gulnara Karimova, the imprisoned daughter of Uzbekistan’s late president, Islam Karimov, according to the Swiss Attorney General’s Office (OAG).

The OAG claims that Lombard Odier facilitated the laundering of funds associated with “The Office,” a criminal organization that reportedly operated across several countries and funneled hundreds of millions of dollars in bribes from telecom companies between 2005 and 2012. Prosecutors allege that the bank failed to adhere to anti-money laundering standards and its own internal protocols when managing nine bank accounts now under scrutiny. The indictment asserts that a former employee of Lombard Odier’s private clients section, who worked there between 2008 and 2012, was instrumental in opening or arranging the opening of these accounts.

In a statement, Lombard Odier denied any wrongdoing and emphasized its cooperation with authorities, noting that the investigation began after the bank itself reported suspicious activity to Swiss authorities in 2012. “The allegations are unfounded and without merit and are firmly rejected by the bank,” the statement read. The bank, which traces its origins back to 1796, reported client assets totaling 296 billion Swiss francs ($336 billion) as of the end of last year.

Karimova, who is currently serving multiple sentences in Uzbekistan for charges including embezzlement and extortion, was indicted by Swiss authorities last year over her alleged involvement in the scheme. She has previously denied these allegations but could not be reached for comment on the latest developments.

Experts have highlighted the significance of the charges against Lombard Odier. “It’s highly unusual for a bank to be charged,” said Peter V. Kunz, a business law professor at the University of Bern. Kunz noted that while the bank faces a potential fine under criminal law, the reputational damage might prove more significant. Regulators could impose additional sanctions if the charges lead to a conviction.

Dominik Gross, an economic historian with the Swiss NGO Alliance Sud, remarked on the broader implications for Switzerland’s financial sector. “The indictment is the latest in a growing series of setbacks for the country’s financial sector,” he said, though he noted that the case alone is unlikely to seriously harm Lombard Odier, a private bank less exposed to market risks compared to institutions like Credit Suisse. He cited the latter’s collapse in 2023 after successive scandals eroded client trust.

The indictment comes on the heels of another high-profile case, in which Credit Suisse, now part of UBS, was acquitted of failing to prevent money laundering by a Bulgarian cocaine trafficking gang, overturning a 2022 conviction. Together, these cases highlight a shift in the scrutiny facing Swiss financial institutions, whose historic reputation for banking secrecy has been increasingly challenged by international pressure.

Prosecutors believe that funds linked to “The Office” were laundered through Lombard Odier’s Geneva accounts, raising questions about oversight and compliance. While the charges against Lombard Odier add to the growing legal and reputational challenges faced by Swiss banks, experts argue that the scandal is part of a broader transformation in the country's financial landscape.

By fLEXI tEAM