UBS Will Pay $511 Million to End Credit Suisse US Tax Probe-OxBig News Network

UBS Group AG agreed to pay $511 million to settle a US investigation into how Credit Suisse Group, the Swiss bank it bought, helped rich Americans evade taxes even after pledging to stop the practice a decade ago. 

A Credit Suisse unit pleaded guilty to conspiring to help its customers hide more than $4 billion from the Internal Revenue Service in at least 475 offshore accounts, the Justice Department said. The US also filed a criminal charge related to US accounts booked at Credit Suisse AG Singapore, which it will drop if the bank cooperates sufficiently. 

The resolution ends a long running scandal involving Credit Suisse, which used Swiss bank secrecy laws to help Americans hide money from the IRS for decades. Prosecutors on Monday said that the bank breached its 2014 plea agreement, when it pledged to uncover and disclose US accounts to tax officials. 

“UBS was not involved in the underlying conduct and has zero tolerance for tax evasion,” the bank said in a statement, noting that it expects to recognize a credit at group level from the partial release of the contingent liability established with the acquisition of Credit Suisse.

The Zurich-based bank also said that it expects to record a charge in the second quarter in relation to the agreement.

The settlement by President Donald Trump’s Justice Department came after prosecutors under former President Joe Biden failed to resolve the case, despite pledging to crack down on repeat corporate offenders. 

Pressure mounted after a 2023 Senate Finance Committee report said there were “major violations” of Credit Suisse’s 2014 plea deal, and the bank failed to fully disclose US assets despite having identified “thousands of previously undeclared accounts” valued at more than $1.3 billion.

The report detailed how Credit Suisse enabled tax cheating by Dan Horsky, an American business professor who pleaded guilty in 2016 to hiding more than $200 million in assets from the IRS.

It also detailed how the bank helped a family of dual citizens of the US and a Latin American country evade taxes. Whistleblowers told the committee the family members held nearly $100 million at Credit Suisse for a decade before transferring those assets to other banks without telling the IRS.

An attorney for the whistleblowers, Jeffrey Neiman, said their evidence “uncovered and exposed this ongoing misconduct” despite the risk it posed to them.

“Today, they feel vindicated – for telling the truth, for risking everything, and for standing up to the one of the world’s most powerful financial institutions,” Neiman said.

On March 10, Gilda Rosenberg, a Florida businesswoman and Credit Suisse client, pleaded guilty to conspiring with two family members to hide $90 million from the IRS between 2010 and 2017. She admitted that she conspired to defraud the US, evade taxes and fail to file foreign bank account reports, also known as FBARs. Her family held about 15 accounts at Credit Suisse between 1979 and 2013, according court documents. 

The tax resolution came after UBS received a key regulatory exemption to manage $11 billion in US pension funds despite four previous convictions between UBS and Credit Suisse. On Jan. 15, the Labor Department granted a five-year extension to UBS of its status as a so-called Qualified Professional Asset Manager.

UBS secured the exemption despite the Labor Department noting the “scope, seriousness, and recurrent nature of UBS’ prohibited misconduct are unique,” according to a notice in the Federal Register. The agency cited the need for independent annual audits to ensure UBS adheres to “applicable fiduciary provisions” and “a strong culture of compliance.”

Since Credit Suisse’s 2014 guilty plea, other US clients of the bank have also been charged in tax cases. They include a Brazilian-American businessman, Dan Rotta, who pleaded guilty on March 17 to using banks including Credit Suisse to hide millions of dollars in assets from US tax authorities. 

The Justice Department said the agreements provides no protection for individuals, suggesting that there could be new cases.

UBS said in its first-quarter report that it had a provision for potential costs tied to Credit Suisse’s compliance with the 2014 plea deal. It didn’t disclose an amount.

A Bloomberg Intelligence analysis earlier this month estimated that more than a quarter of the group’s legal reserves of $3.85 billion at the end of March were for various Credit Suisse cases in the US. UBS also had $2 billion in contingent liabilities relating to litigation, regulatory and similar matters for the Credit Suisse purchase.

The settlement comes amid fresh scrutiny of Credit Suisse’s history of handling Nazi-linked accounts. In December, the bank reinstated Neil Barofsky as an independent ombudsman to oversee its review of those accounts. The decision was announced by the US Senate Budget Committee, which has been probing Credit Suisse’s internal investigation.

“A clear-eyed and historically complete evaluation of Credit Suisse’s servicing of Nazi-linked accounts demands painful facts to be met head on, not swept aside,” Senator Chuck Grassley of Iowa and Senator Sheldon Whitehouse of Rhode Island said in a statement at the time.

With assistance from Sabrina Willmer.

This article was generated from an automated news agency feed without modifications to text.