Credit Suisse continued enabling tax evasion after 2014 settlement with DoJ, US Senate finds
Credit Suisse violated a settlement agreement with the US Department of Justice as it continued to help wealthy Americans to avoid paying tax, a Senate investigation has alleged.
The probe, which took two years to complete, accused the lender – which will shortly be taken over by UBS – of committing “major violations” following its plea deal with the agency.
Back in 2014, Credit Suisse pleaded guilty to assisting tax evasion and agreed to pay $2.6bn penalty to the DoJ. It was later reduced to $1.3bn.
Based on the committee’s findings, the total amount concealed from authorities in violation of the 2014 plea agreement is more than $700m.
“Credit Suisse enabled what appears to be potentially criminal tax evasion to go undetected for almost a decade,” the investigation said.
“At the centre of this investigation are greedy Swiss bankers and catnapping government regulators, and the result appears to be a massive, ongoing conspiracy to help ultra-wealthy U.S. citizens to evade taxes and rip off their fellow Americans,” Senator Ron Wyden, chair of the Senate Finance Committee said.
“Credit Suisse got a discount on the penalty it faced in 2014 for enabling tax evasion because bank executives swore up and down they’d get out of the business of defrauding the United States. This investigation shows Credit Suisse did not make good on that promise, and the bank’s pending acquisition does not wipe the slate clean,” Wyden added.
In the most egregious and “ongoing” case, the committee said the bank failed to disclose nearly $100m in offshore accounts belonging to a single family.
The committee also revealed new information on how Credit Suisse bankers aided offshore tax evasion by the Israeli-American economics professor Dan Horsky. According to the committee, employees at the bank “knowingly and willfully” helped Horsky conceal $220m from U.S. authorities. Horsky pleaded guilty in 2016 and was fined $124m in one of the largest criminal tax evasion cases in American history.
The Senate committee called for the DoJ to investigate whether Credit Suisse violated its plea agreement and decide whether any of those violations merit “further criminal prosecution”.
The DoJ didn’t immediately respond to a request for comment, but firms that breach plea agreements can be subject to big penalties.
The DoJ threatened to prosecute HSBC after finding it guilty of money laundering, which could potentially have lead to a revocation of its US banking licence. But an intervention from then chancellor George Osborne, who warned that a prosecution could have hugely damaging consequences for wider financial stability, the DoJ instead opted for a record $1.92bn fine in 2012.
A spokesperson for Credit Suisse said: “Credit Suisse does not tolerate tax evasion. In its core, the report describes legacy issues, some from a decade ago, and we have implemented extensive enhancements since then to root out individuals who seek to conceal assets from tax authorities.”
“Credit Suisse’s new leadership team has cooperated with the Committee’s inquiry and has supported the work of Senator Wyden, including in respect of suggested policy solutions to help strengthen the financial industry’s ability to detect undisclosed US persons,” the spokesperson continued.
“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,” they said.
“Credit Suisse is also actively cooperating with US authorities including the DOJ to address some remaining legacy conduct or policy concerns, and will continue to do so,” they added.