Swiss banker given ten years over Venezuela money laundering

A former executive at the Swiss bank Julius Bär was sentenced Monday to ten years in prison for his role in laundering more than $1 billion looted from Venezuela's state oil company.

Swiss banker given ten years over Venezuela money laundering
Matthias Krull is a former employee of Swiss private bank Julius Bär. File photo: AFP

Matthias Krull, a 44-year-old German resident of Panama, pleaded guilty in August for his role in conspiracy to hide funds embezzled from Petroleos de Venezuela, or PDVSA, the principal source of income in the country now suffering economic collapse and massive inflation.

Under President Nicolas Maduro the country is facing dire shortages of basic goods like food and medicine, and skyrocketing inflation projected to soar over 1 million percent this year, reaching an unreal 10 million percent in 2019.

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Krull admitted to joining the conspiracy in 2016 and using Miami real estate as well as “sophisticated false-investment schemes” to hide the fact $1.2 billion had been stolen from PDVSA, according to the Justice Department.

US authorities arrested Krull in Miami in July, and he has indicated the scheme involves many more actors including “complicit money managers, brokerage firms, banks and real estate investment firms in the United States and elsewhere, operating as a network of professional money launderers,” the Justice Department said.

Krull's co-conspirators include former PDVSA officials, and members of the Venezuelan elite, known as “boliburgues.”

The Venezuelans indicted in the case are Francisco Convit, shareholder of energy company Derwick Associates; Carmelo Urdaneta, former petroleum and mining ministry legal advisor; Abraham Ortega, ex-PDVSA staffer; and José Vicente “Chente” Amparan, a businessman with links to Spain and Malta.

Ortega is expected to plead guilty on Wednesday.

A federal judge in Miami ordered Krull to pay a $50,000 fine and to forfeit $600,000, the Justice Department said in a statement.

Krull, who had been free on a $5 million bond, is due to enter a federal prison on April 29th, according to Bloomberg.

Swiss bank Julius Bär announced recently it was closing its operations in Panama and Peru in what it described as part of a strategic review of its business in Latin America.

The private bank hopes to maintain client relationships in those countries with bankers and other staff moved to Bahamas, Chile or Switzerland, a Julius Bär spokesperson was quoted as saying by Bloomberg.

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Reader question: Can a foreign national obtain a loan in Switzerland and under what conditions?

When it comes to borrowing money from a Swiss bank, nationality may play a role in some cases, but not in others. This is what you should know about this process.

Reader question: Can a foreign national obtain a loan in Switzerland and under what conditions?
Getting a losn in Switzerland is subject to many conditions. Photo by Claudio Schwarz/Unsplash

Like almost everything in Switzerland, consumer loans are regulated by legislation, in this case the Consumer Credit Act.

It defines a loan as between 550 and 80,000 francs, “offered by commercial providers of financial services”. Lower or higher amounts are not subject to the Consumer Credit Act.

As is the case in many other countries, Swiss banks have strict criteria about who they lend money to. After all, no financial institution wants to deal with people who are not creditworthy.

Whether or not a foreign national can borrow money from a bank depends on their permanent place of residence and permit status.

As a rule, Swiss lenders don’t give loans to non-residents. So if you reside abroad, there is practically no chance that a bank in Switzerland will lend you money.

However, some financial institutions make exceptions for cross-border workers. If you fall under this category, you can use this interactive tool, select “ Permit G” under “Residence Permit” and see what, if any, options, there are.

READ MORE: EXPLAINED: What cross-border workers should know about taxation in Switzerland

If you are a foreign national but have a permanent residence status (Permit C), your chances of getting a loan are practically the same as those of Swiss citizens — provided, of course, that you meet all the requirements set by lenders (see below).

What about other permit holders?

If you have a B Permit, you might be approved for a loan, depending on how long you have had this permit — obviously, the longer the better.

However, “you may be offered a higher interest rate or a limited loan amount. This is because of the statistically higher probability that you will return to your home country. Some lenders require the loan to be repaid by the time the B permit expires”, according to consumer comparison site 

Holders of other, temporary or conditional permits are not accepted.

READ MORE: ‘A feeling of belonging’: What it’s like to become Swiss

What conditions — other than residence permit — should you fill to be considered for a loan?

You must be at least 18 years of age, though additional restrictions may apply to applicants under 25 — for instance, a higher interest rate or a limited loan amount. That’s because “lenders are generally more cautious with young applicants as their financial circumstances are usually less settled and the risk of default is deemed to be higher,” Comparis noted.

The same cautious approach applies to pensioners, especially those who have no regular income. The social security payments (AHV/AVS) do not count as income for the purpose of the loan.

There is also other eligibility criteria, based on employment status and salary. People with a regular income have a higher chance of obtaining a loan than those who are self-employed, temporarily employed, work on hourly basis or, logically, unemployed.

Other factors, including your existing debts, are also taken into account in the decision process.

Basically, lenders favour applicants with a stable income and good financial standing, in much the same way as supplemental health insurance carriers prefer young and healthy people.

Keep in mind that if your loan application is rejected, this will be recorded in the database of the  Central Office for Credit Information, making it more difficult, though not impossible, to get a loan in the future.

The same rules do not apply to American citizens

That’s because Swiss and European banks are subjected to US demands to disclose the assets of Americans overseas in order to prevent tax evasion.

As adherence to these requirements is a major headache for the banks and in some cases also violates their country’s privacy laws, financial institutions prefer not to deal with Americans at all, even those who are permanent residents.

If you are a US citizen who also has Swiss nationality, you may have an easier time of it, but could still face hurdles in obtaining loans and other banking services.

There is no immediate relief in sight, although many organisations representing Americans abroad are lobbying in Washington to change the existing legislation.