Financial institution Credit Suisse admits to tax offenses, arranges to pay a fine of $511M.
In a significant turn of events, UBS, the Swiss banking giant, has agreed to pay over $510 million to settle a years-long investigation into helping taxpayers hide assets and income in offshore accounts. The deal comes as UBS acquires Credit Suisse in a government-orchestrated deal worth $3.25 billion, announced in March 2023.
The investigation, led by the U.S. Justice Department, has a long and troubled history with Credit Suisse. The bank has been implicated in multiple tax evasion-related issues concerning offshore accounts, with notable investigations tracing back to the early 2000s.
One notable case involves a Florida woman, Gilda Rosenberg, and her family. Starting in the early 2000s, they used Credit Suisse accounts to consolidate over $90 million in offshore assets as part of a long-term tax evasion scheme. Despite explicitly informing Credit Suisse they were U.S. persons, the family sought to conceal their assets from U.S. tax authorities. In response, Credit Suisse closed their accounts in 2013 when it determined the account holders were U.S. persons seeking to evade taxes. The family then moved their assets to other private banks in Switzerland, Israel, and Andorra, using false documents to hide beneficial ownership and citizenship status from authorities.
This case is part of a broader pattern where Credit Suisse and other Swiss banks have been implicated in offshore tax evasion schemes. Investigations such as those related to the Panama Papers named Credit Suisse among banks facilitating offshore companies and transactions linked to tax avoidance and political corruption. While Credit Suisse itself has not been charged criminally in these public records, it has been linked to enabling tax evasion through its banking secrecy and offshore accounts.
U.S. Justice Department investigations have led to convictions like Rosenberg's, who pleaded guilty to conspiracy to commit wire fraud and was sentenced to prison, with substantial financial penalties and restitution to the IRS. These investigations highlight Credit Suisse’s role as a facilitator for clients attempting to evade U.S. tax obligations through offshore accounts.
In 2014, Credit Suisse agreed to pay $2.6 billion, the largest payment to date in a criminal tax case, as part of a plea deal. However, investigations conducted by the Senate Finance Committee from 2014 to 2023 found that Credit Suisse violated the agreement by failing to report a potential ongoing criminal tax conspiracy involving nearly $100 million in secret offshore accounts.
The settlement, reached about two years after the Senate Finance Committee investigation, vindicates the findings of the investigation, which exposed how Credit Suisse kept hiding more than $700 million offshore for rich Americans in violation of their deal to avoid prosecution. The funds from the secret offshore accounts were transferred to other banks without notifying the DOJ, a requirement of the 2014 plea agreement.
The acquisition of Credit Suisse by UBS comes with expectations of a charge concerning the resolution in the second quarter. UBS has signed a non-prosecution agreement and agreed to assist the Justice Department in its ongoing probe.
Finance Committee Ranking Member Ron Wyden, D-OR, has called for the criminal prosecution of Credit Suisse bankers and advisers who helped wealthy clients evade taxes. He stated that the settlement vindicates the findings of his investigation and exposes the bank's continued efforts to hide money offshore for its clients.
This news serves as a reminder of the ongoing efforts to combat tax evasion and the consequences faced by banks involved in such activities. As UBS takes over Credit Suisse, it remains to be seen how the bank will address and rectify the past actions of its newly acquired entity.
- Finance committee investigations have revealed that UBS, now the owner of Credit Suisse, could face charges this quarter due to the unresolved issues regarding Credit Suisse's involvement in offshore tax evasion schemes.
- The general-news and crime-and-justice sectors have been actively monitoring the role of UBS, a Swiss banking giant, in the long-standing tax evasion issues implicating Credit Suisse, following their acquisition of the troubled bank.
