UBS Group, which recently acquired the collapsed Swiss bank Credit Suisse in a last-minute bailout, may encounter a new set of legal and regulatory issues as a result of the acquisition.
According to two former Credit Suisse bankers who are now serving as whistleblowers for the U.S. government, the bank has offered a secure environment for affluent American customers to conceal assets from the IRS for several years, even after facing prosecution for similar practices over a decade ago, they told CNBC in an exclusive interview.
In 2014, Credit Suisse pleaded guilty to criminal charges of "knowingly and willfully" aiding thousands of American clients in hiding their offshore assets and income from the IRS. The bank acknowledged using fraudulent entities, destroying account records, and hand-delivering cash to American customers in an attempt to evade IRS detection. As part of its plea deal, Credit Suisse agreed to cooperate with authorities and implement reforms, including disclosing its cross-border activities and enforcing measures to prevent tax evasion, the outlet reported.
"The now troubled bank appears to have violated that agreement, according to a new report by the Senate Finance Committee that details ongoing and rampant abuse since then. The report, released Wednesday, details the findings of the panel’s two-year investigation and takes on more urgency given the looming banking crisis," CNBC added.
"The Swiss National Bank, the country’s central bank, injected more than $100 billion of liquidity into Credit Suisse to keep it afloat earlier this month, while the Swiss government agreed to provide UBS with some $9 billion to backstop losses resulting from the takeover," said the report.
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The recent disclosures by the whistleblowers have prompted Senate investigators to question the extent of American funds that may still be concealed within the vaults of Credit Suisse, a bank whose collapse shook the bedrock of the international banking system, the network added.
Prepared by the panel's Democratic staff, the Senate report asserts that Credit Suisse violated the conditions of its 2014 plea agreement, potentially leading to a range of consequences if the Justice Department decides to take action. The extent of the potential liability that UBS faces as a result of the report remains uncertain, but the whistleblowers' lawyer contends that the bank could be liable for up to $1.3 billion.
The Chairman of the Senate Finance Committee, Ron Wyden of Oregon, has disclosed that his committee has recently received information from Credit Suisse regarding previously undisclosed accounts held by American clients at the bank after 2014, the outlet reported.
“It is still going on as of just the last couple of days — even more money has been found to have been concealed and there are very substantial issues here,” Wyden said, according to CNBC. “Clearly, it’s time to prosecute and ensure that there are penalties that send a strong message.”
“Credit Suisse employees aided and abetted a major criminal tax evasion scheme,” a finance committee aide said on condition of anonymity because the report had yet to be released. “To date, no Credit Suisse employees involved in the scheme have faced any consequences from the United States government for their participation.”
“They thought they could get away with it, and they largely did,” the aide said. “It’s not a question of whether Swiss banks continue to do this, it’s a question of which Swiss banks still do this.”
A spokeswoman for Credit Suisse said the institution does not put up with 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,” the spokeswoman said after asking to speak anonymously. She added that the bank’s new leadership team has been cooperating with the committee.
Credit Suisse 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," she noted further.
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