Credit Suisse violated a 2014 plea deal with the US government for the Swiss bank’s role in helping wealthy Americans evade tax, according to an investigation by the Senate finance committee.
The two-year probe by the committee claimed the bank — which is being taken over by rival UBS — failed to disclose nearly $100mn in secret offshore accounts belonging to a single family of US taxpayers.
“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 US citizens to evade taxes and rip off their fellow Americans,” said Senator Ron Wyden, who chairs the committee.
Under the 2014 deal struck with the Department of Justice, Credit Suisse was fined $2.6bn, but settled for $1.3bn after agreeing to comply with disclosure rules.
But in March 2021, several former Credit Suisse bankers who originally blew the whistle on their employer urged US authorities to reopen the case, stating that the tax evasion continued “well after the plea agreement and sentencing”.
The release of the committee’s investigation comes less than two weeks after UBS agreed to buy Credit Suisse for $3.25bn in a deal orchestrated by Swiss regulators in the face of a deepening crisis at the bank and wider turmoil across the banking sector.
Following the launch of the investigation, whistleblowers in 2021 informed the committee that Credit Suisse also held undeclared accounts worth nearly $100mn for a family of dual US-Latin American citizenship, according to the report.
The bank “intentionally” hid the clients’ US citizenship on internal paperwork and helped them “quietly close” the accounts and transfer the assets elsewhere, the report said, citing the whistleblowers.
This may lead to one of the largest penalties for violations of foreign bank account registration rules in US history, the committee said.
The 77-page report also set out Credit Suisse’s alleged efforts to help Dan Horsky, a wealthy Israeli-American economics professor conceal $220mn in offshore accounts from the government. In 2017, Horsky was sentenced to seven months in prison for tax evasion.
Staff at the Swiss bank were aware of Horsky’s potential tax compliance issues at least three years before declaring one of his accounts after being contacted by the DoJ in 2015, the report found. The report claimed that the bank worked with Horsky to remove his formal control on accounts, switching ownership to family members.
According to the report, Credit Suisse informed the committee that it had disclosed thousands of undeclared accounts worth more than $1.3bn to US authorities since its plea agreement. But in response to the committee’s inquiries, the bank found 23 additional client relationships valued at more than $20mn with potentially undeclared accounts, the report said.
As a result, the committee is “concerned that years after signing its plea agreement, Credit Suisse is still disclosing hundreds of millions of dollars in large undeclared accounts belonging to ultra-high net worth US persons in response to heightened scrutiny from Congress and DoJ”.
The DoJ did not immediately respond to a request for comment.
“The bank’s demise does not erase its liabilities. UBS assumed those liabilities,” said Jeffrey Neiman, a lawyer representing the whistleblowers. “The failure to insist on the collection of this $1.3bn would be asking the American taxpayers to cover the cost of Credit Suisse’s bailout.”
Credit Suisse has faced fines from European regulators over similar issues in recent years, including a €238mn settlement with French authorities to resolve claims that it broke anti-money laundering laws by luring wealthy clients to Switzerland.
In a statement on Wednesday following the release of the finance committee’s investigation, Credit Suisse said it “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.”
It added: “Credit Suisse’s new leadership team has co-operated 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.”
Source: Financial Times