Credit Suisse was found guilty on Monday by Switzerland's Federal Criminal Court of failing to prevent money laundering by a Bulgarian cocaine trafficking gang.

This was Switzerland's first criminal prosecution involving one of its major banks.

A former employee was found guilty of money laundering in the trial, which included testimony on killings and cash stuffed into bags and is considered a test case for prosecutors taking a harsher stance against the nation's banks.

The verdict is setback challenge for the second-largest bank in Switzerland, which has suffered billions in losses due to risk-management and compliance errors.

The former employee and Credit Suisse both denied any misconduct. Credit Suisse said it would appeal the conviction. 

Alice de Chambrier, a federal prosecutor, hailed the verdict as "excellent for transparency."

The court announced on Monday that it discovered shortcomings in Credit Suisse's management of client relationships with the criminal organization and monitoring of the application of anti-money laundering regulations.

The judges examined whether Credit Suisse and the former employee did enough to prevent the cocaine trafficking ring from 2004 to 2008 from laundering money through the bank.

"These inadequacies allowed the criminal organization's assets to be withdrawn, which led to the conviction of the bank's former employee for money laundering," the court stated.

"If the bank had fulfilled its organizational requirements, it could have averted the infraction," the presiding judge said in delivering the verdict, adding that the former employee's superiors had been "passive."

Credit Suisse stated that the case was the result of an inquiry that extended back over 14 years.

"Credit Suisse is regularly testing and enhancing its anti-money laundering framework in conformity with growing regulatory requirements," the bank said.

Credit Suisse's primary objective is to generate compliant company growth in accordance with legal and regulatory obligations, the bank said.

The Swiss financial institution Credit Suisse was fined 2 million Swiss francs ($2.1 million).

The court also ordered the forfeiture of more than 19 million francs, the amount that could not be seized due to Credit Suisse's internal shortcomings, which the drug ring maintained in accounts with Credit Suisse.

The former employee, who cannot be identified due to Swiss privacy regulations, was given a suspended 20-month prison sentence and a fine for money laundering by the court.

The presiding judge stated that she had failed in her duties as the "first line of defense" for the bank.

The former banker's attorney stated she will file an appeal against the "unjust and unjustifiable decision," pointing out that she had not benefited financially.