Credit Suisse still helping Americans dodge taxes, Senate panel says

Credit Suisse still helping Americans dodge taxes, Senate panel says
The committee uncovered 'major violations' of the $2.6 billion plea deal Credit Suisse reached with the Justice Department in 2014, according to a report.
MAR 29, 2023

Credit Suisse Group AG continues to help rich Americans hide assets from the IRS almost a decade after a unit pleaded guilty to tax evasion conspiracy, the U.S. Senate Finance Committee said, as the bank’s woes mount amid broader tumult in the industry.

The committee uncovered “major violations” of the $2.6 billion plea deal Credit Suisse reached with the Justice Department in 2014, according to a report released Wednesday. The report cited “what may be an ongoing criminal tax conspiracy” involving almost $100 million in secret offshore accounts belonging to a family of dual US-Latin American citizens.

In a statement accompanying the report, Senator Ron Wyden, the Oregon Democrat who chairs the committee, slammed “greedy Swiss bankers” who appear to be engaged in a “massive, ongoing conspiracy to help ultra-wealthy U.S. citizens to evade taxes and rip off their fellow Americans,” despite Credit Suisse’s promises.

Several other Swiss banks — Union Bancaire Privee, PKB Privatebank AG and Bank Leumi — received undeclared funds in 2012 and 2013 from the family, the committee said. UBP had no immediate comment, while PKB and Bank Leumi didn’t immediately respond to requests for comment.

INDUSTRY TURMOIL, UBS LIABILITY

The committee said Credit Suisse has identified at least $780 million in undeclared assets disclosed since the bank’s guilty plea in 2014. They include:

  • $220 million from Dan Horsky, a U.S. taxpayer who pleaded guilty in 2016
  • Nearly $100 million from the family of dual U.S.-Latin American citizens
  • 23 accounts of at least $20 million each

The report comes as the bank is being sold to rival UBS amid global turmoil in the industry, set off by the run on Silicon Valley Bank in California, and as UBS and Credit Suisse are under a Justice Department probe into whether financial professionals helped Russian oligarchs evade sanctions. On top of that, it came out right after prosecutors in France raided some of the nation’s largest lenders, including Societe Generale SA and BNP Paribas SA, as part of an investigation into suspected tax fraud and money laundering.

The report raises new challenges for UBS as it takes over a bank that could face further action from the Justice Department. As the Credit Suisse rescue plan emerged, UBS expressed concern about taking on its rival’s potential legal liabilities. Banks can face severe penalties for breaching U.S. sanctions. BNP Paribas in 2014 agreed to pay almost $9 billion after pleading guilty to U.S. charges for processing transactions for sanctioned Sudanese, Iranian and Cuban entities.

Credit Suisse said it does not tolerate tax evasion, and its new management is “actively cooperating” with the Justice Department and other U.S. authorities to address remaining legacy conduct or policy concerns.

“Our clear policy is to close undeclared accounts when identified, and to discipline any employee who fails to comply with bank policy or falls short of Credit Suisse’s standards of conduct,” the bank said.

To oversee the historic acquisition of Credit Suisse, UBS is bringing back Sergio Ermotti as chief executive officer.

‘REPEAT OFFENDERS’

Under the 2014 plea agreement, Credit Suisse still has an obligation to identify all undeclared accounts to the Internal Revenue Service. The committee uncovered two dozen “large, potentially undeclared accounts” belonging to wealthy clients, the report said. Last year, the bank identified 10 clients with accounts of $20 million or more. In recent days, the bank also disclosed another 13 accounts with $20 million or more that may be held by U.S. individuals.

Wyden said the Senate’s investigation shows Credit Suisse didn’t live up to the 2014 deal and that its pending acquisition by UBS “does not wipe the slate clean.” The senator called on the Justice Department to crack down on “repeat offenders like Credit Suisse” and pursue criminal investigations of individual bankers.

“It is deeply concerning that almost nine years after executives testified before Congress that the bank would clean up its act, Credit Suisse is still disclosing hundreds of millions of dollars in secret offshore accounts belonging to wealthy U.S. taxpayers,” the report said.

Latest News

Private equity is knocking. Who should be in your corner?
Private equity is knocking. Who should be in your corner?

For sellers weighing PE deals, due diligence shouldn't end with the offer on the table – the acquiring platform and the M&A advisor deserve a hard look as well.

Freehold Wealth Management brings $576M to Osaic in multigenerational move
Freehold Wealth Management brings $576M to Osaic in multigenerational move

South Carolina estate planning firm joins Osaic’s IBD network, citing succession planning tools and multigenerational growth resources.

Investors still want advisors, even as AI expands investment choices
Investors still want advisors, even as AI expands investment choices

A new SIFMA and KPMG study of more than 2,100 US investors finds satisfaction high, AI-only trust falling, and demand for human guidance growing across every generation.

AI poses moderate disruption risk to wealth managers and retail banks, Fitch says
AI poses moderate disruption risk to wealth managers and retail banks, Fitch says

Retail banks and private wealth firms scored 40 in Fitch's AI stress test, signaling possible one-notch downgrade risk under an adverse scenario.

Advisor moves: RBC lands $1B UBS team in Pittsburgh
Advisor moves: RBC lands $1B UBS team in Pittsburgh

Elsewhere, Wells Fargo Advisors adds a $400 million Morgan Stanley veteran in Naples as an ex-Cetera advisor goes independent with LPL.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor