Earlier this month, UBS Group rescued the failing Swiss bank Credit Suisse in a last-minute deal that might cause the company significant regulatory and legal headaches.
Notably, the Swiss bank continued to offer a safe haven for affluent American customers to conceal assets from the IRS, even after it was discovered and prosecuted for doing the same thing more than a decade ago, according to a report by the Senate Finance Committee published on March 29 citing two former Credit Suisse bankers who are now working with the US government as whistleblowers.
The report exposes widespread and persistent exploitation since then; the now-struggling bank seems to have breached that agreement. With the impending financial crisis, Wednesday’s report, which explains the conclusions of the panel’s two-year probe, takes on more significance.
“Credit Suisse employees aided and abetted a major criminal tax evasion scheme. To date, no Credit Suisse employees involved in the scheme have faced any consequences from the United States government for their participation,” a finance committee aide revealed.
Credit Suisse breaks measures to a plea deal
In 2014, the bank infamously pleaded guilty to “knowingly and willfully” aiding thousands of US customers in their efforts to hide overseas assets and income from the Internal Revenue Service.
As part of its plea deal, it acknowledged that, in the past, it had utilized shell companies, deleted account records, and handed cash by hand to US clients in order to avoid discovery by the IRS. Credit Suisse had already committed to several measures at the time, including being transparent about its international operations and working with authorities to provide information when requested.
The Senate report, written by the Democrats on the panel, claims the bank broke its 2014 plea bargain, which may lead to severe consequences if the DOJ pursues the matter. A lawyer representing the whistleblowers claims the bank should pay as much as $1.3 billion. However, it is unclear how much responsibility UBS faces as a consequence of the investigation.
It is also unclear how much American money was stored in the vaults of the bank whose collapse shook the foundations of the global financial system, according to the Senate’s investigators.
Swiss National Bank injects nearly $100 billion into Credit Suisse
It is worth noting that Credit Suisse was rescued to the tune of almost $100 billion by the Swiss National Bank earlier this month. In comparison,e UBS was promised around $9 billion to backstop losses from the acquisition by the Swiss government.
Interestingly the news comes amid the banking scandal crisis; Finbold reported on Monday, March 27, that French authorities raided five major banks in a €100 billion fraud probe.
Specifically, Société Générale, BNP Paribas, Exane, Natixis, and HSBC, were linked to the legally questionable ‘cum/cum’ (Lat. ‘with/with’) practice, in which banks create complicated legal structures to allow wealthy clients to get around the taxation of dividends.