NEW YORK: UBS Group AG has agreed to pay US$511mil to settle a US investigation into how Credit Suisse Group, the Swiss bank it bought, helped rich Americans evade taxes even after pledging to stop the practice a decade ago.
A Credit Suisse unit pleaded guilty to conspiring to help its customers hide more than US$4bil from the Internal Revenue Service in at least 475 offshore accounts, the Department of Justice said.
The US also filed a criminal charge related to US accounts booked at Credit Suisse AG Singapore, which it will drop if the bank cooperates sufficiently.
The resolution ends a long-running scandal involving Credit Suisse, which used Swiss bank secrecy laws to help Americans hide money from the IRS for decades.
Even after reaching a 2014 deal where it pledged to stop the practice, Credit Suisse helped US taxpayers open and maintain accounts they didn’t declare to the IRS, hiding their assets and income.
“Credit Suisse committed new crimes and breached the May 2014 plea agreement with the United States,” according to documents filed in a federal court in Alexandria, Virginia.
Credit Suisse unlawfully helped clients hide assets, including a billionaire scion of a wealthy European family, according to the court filings that didn’t name him.
Given his holdings, Credit Suisse had the “highest obligation” to know as much about him as possible but failed to ask about his status, classify him as a US taxpayer, or close his account, the bank said.
“As early as 2010, the European billionaire was the subject of numerous news articles that identified him as a US resident living in a mansion and referenced US lawsuits in which he admitted to US residency,” according to the court documents.
“Credit Suisse kept the account open for years after it had definitive knowledge of the account holder’s US status.”
UBS must continue to cooperate with the US under the deal, which could expose other clients to prosecution.
“UBS was not involved in the underlying conduct and has zero tolerance for tax evasion,” the bank said in a statement.
It said it expects to recognise a credit at group level from the partial release of the contingent liability set up with its acquisition of Credit Suisse.
The Zurich-based bank also said that it expects UBS AG to record a charge in the second quarter in relation to the agreement.
The settlement by President Donald Trump’s Justice Department came after prosecutors under former President Joe Biden failed to resolve the case, despite pledging to crack down on repeat corporate offenders.
Pressure mounted after a 2023 Senate Finance Committee report said there were “major violations” of Credit Suisse’s 2014 plea deal. It put the value of “thousands of previously undeclared accounts” valued at more than US$1.3bil far below the US$4bil that the bank admitted on Monday. — Bloomberg
