(Bloomberg) -- Half a dozen past and present bankers including the local head of Banque Havilland are on trial in Monaco, accused of turning a blind eye as clients dropped off or withdrew cash totaling about €15 million ($16 million).

In a case that sheds light on lax controls in the tax haven about a decade ago, two of the bankers – one who worked at a Mediobanca SpA subsidiary and another at Havilland – face money-laundering charges. Monaco Prosecutor Julien Pronier recommended a 6-month suspended jail term and an industry ban for the pair, who managed the accounts of two Italians.

Four others, including the CEO, are accused of the lesser infraction of failing to report suspicious transactions involving big cash sums while holding compliance roles at Havilland and Edmond de Rothschild. Pronier sought a €10,000 fine. No ruling date has been announced.

When quizzed by Judge Florestan Bellinzona on Tuesday, the men tried to explain that accepting vast amounts of cash from non-residents was commonplace in the Monaco financial sector at the time of the alleged wrongdoing — and didn’t seem problematic.

“Nowadays it isn’t possible, but back then it was. We were paid to do it,” said Nicolas Gelso, who managed the account of an Italian businessman at Mediobanca’s CMB Monaco. “There isn’t a bank colleague over 40 to 50 who hasn’t been involved in this, that’s impossible.”

‘Docile Clientele’

That Italian client deposited hundreds of thousands of euros in CMB accounts. A “very, very slim” amount compared to cash coming from other clients.

“Millions of euros were deposited daily in the books of Compagnie Monegasque de Banque,” Gelso said. For Monaco banks, non-residents were an “easy, captive and docile clientele” because they were unlikely to sue in case an investment went awry, he explained.

Monaco, home to the world’s highest concentration of millionaires, risks being added to an international “gray list” by the Financial Action Task Force as soon as Friday for not making enough progress in tackling illicit flows of money. The designation could hurt Monaco’s financial institutions, which had about €160 billion under management at the end of 2023.

Edmond de Rothschild and CMB declined to comment. Havilland representatives didn’t immediately respond to a request for comment. None of the banks themselves face any accusations.

Investigators say the second Italian entrepreneur, Fabrizio Amore, regularly made €150,000 cash drops at Havilland and then stockpiled currencies in a safe once compliance officers started asking questions with the help of his then account manager, Alexandre Balga. Amore had even larger sums at Edmond de Rothschild.

In total, Monaco authorities froze more than €3 million Amore held in various accounts and safes as well as 8 diamonds valued at nearly $500,000 and numerous watches. But the assets were all returned to him by a 2020 ruling, according to a defense attorney.

Worth €30 Million

Amore told the court that the amounts were accumulated over two decades and denied any dirty origin. He simply described a habit for using cash and said he regularly flipped luxury watches he bought for a profit as a side line to his day job managing firms he owned and real estate investments. He said during the trial that he’s mostly stopped working and is worth about €30 million.

When he had “enough” on his current accounts Amore said he turned to using safes. “I could come take cash and no one asked any questions,” he explained in court.

Prosecutor Pronier sought on Wednesday a six-month prison sentence and a €500,000 fine for Amore.

For several years, Amore has been fighting accusations in Italy in an investigation referred to as the Mafia Capitale case but claims none of the charges ever stuck.

Until those accusations emerged, there was no reason to make report any suspicious transactions even if Amore was “probably” dodging Italian taxes, according to Havilland’s current Monaco CEO Patrick Dauguet.

“I’m not trying to say it was good or bad,” Dauguet told judges Wednesday. “For tax evasion where we didn’t have the same perspective at the time.”

The Monaco case also focuses on two French businessmen — Armand and Luc Pastorel — who collected about €12 million in cash. They distributed profits from their Monaco company to a local administrator who then withdrew the full amount and gave it to the French owners in banknotes against a small cut.

The defendants acknowledged “benefiting” from the “system” but claimed it was very popular throughout the principality and even the Monaco judge said he’d been told by local tax authorities that they had a “very high tolerance” for the practice.

Luc Pastorel on Tuesday said that he’s now facing scrutiny from French financial prosecutors too.

“If I could have my time again, you can imagine that I wouldn’t do the same things,” he said. 

--With assistance from Anthony Cormier.

(Updates with prosecutor’s recommendation starting in 2nd paragraph)

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