Credit Suisse, a Swiss bank recently acquired by UBS, has been accused of aiding ultrahigh-net-worth Americans evade tax evasion. According to a report released by the Senate Finance Committee, the bank violated a plea agreement from 2014 by transferring more than $100 million linked to a U.S. Family with dual citizenship who has offshore accounts with dual citizenship without notifying Justice Department. Additionally, the report alleges that Credit Suisse employees “knowingly and willfully” assisted Dan Horsky, an American business professor who pleaded guilty in a 2016 tax fraud case, to shield $220 million from the U.S. Tax authorities The report also states that Credit Suisse disclosed 23 “potentially undeclared accounts” belonging to the U.S. Citizens, each containing at least $20 million, hid America at least $700 million with Credit Suisse. •
In response, Credit Suisse stated that it does not condone tax evasion and has implemented protocols meant to root out individuals seeking to hide assets from the U.S. Tax Officials are The report’s authors believe that any entity that acquires Credit Suisse would be liable for any penalties arising from violations of the 2014 plea agreement, including potential fines over $1 billion. UBS, which acquired Credit Suisse this month, has said that it expects the transaction to be accretive to its shareholders. •
The findings of the Senate Committee come as the banking sector is still reeling from the collapse of Silicon Valley Bank and Signature Bank in the United States, and President Biden is preparing regulators to impose tighter rules on midsized banks. Following a two-year investigation, the Senate Finance Committee concluded that the Swiss lender had committed “major violations” of the agreement of 2014. These violations included failing to disclose close to $100 million in clandestine offshore accounts owned by a single family of dual US-Latin American citizens, which the committee said represented an “ongoing and potentially criminal conspiracy”.
The committee further recommended that the new owner UBS or the Swiss government should take responsibility for any future fines and called on the Department of Justice and the Internal Revenue Service to investigate if Credit Suisse should face further penalties. Credit Suisse asserted in an email statement that it does not tolerate tax evasion and has been cooperating with US authorities. Last year, it pled guilty to defrauding investors over an $850 million loan to Mozambique and in June the bank was convicted by the Federal Criminal Court in Switzerland of failing to stop the money laundering of a Bulgarian cocaine trafficking gang. •
The Senate Committee believes that the misdeeds of ultra-high net worth tax evaders at Credit Suisse and other banks in Switzerland just scratch the surface. The bank disclosed the accounts only after whistleblowers contacted US authorities as well as those used by a US businessman to conceal more than $220 million. Swiss authorities engineered the rescue of Credit Suisse earlier this month as they scrambled to stop the lender from collapsing. UBS on Wednesday rehired Sergio Ermotti as the chief executive to oversee the takeover. •
This recent report by the Senate Finance Committee highlights the severity of credit Suisse’s violations of US law. Despite its claims of not tolerating tax evasion, the bank has been found to have deliberately concealed millions of dollars from the US authorities. With the Biden Administration preparing to impose stricter regulations on midsize banks, this news may have far-reaching implications for the banking sector.