Credit Suisse Group AG (ADR) is currently in talks with the US Department of Justice to settle allegations that the Swiss bank helped American citizens evade taxes. Credit Suisse is one of a dozen Swiss banks under criminal investigation for allegedly helping US citizens use the bank secrecy laws of Switzerland to hide their assets so they wouldn’t have to pay taxes on them.
The financial institution is no longer taking private-banking clients from the US as authorities in this country continue to crack down on offshore tax cheats. Other Swiss banks under investigation include HSBC Holdings (HSBC) PLC and Julius Baer Group AG (JBAXY).
Because of the scrutiny, these banks cannot take part in a new US DOJ program that lets Swiss banking institutions disclose undeclared US assets in exchange for the possibility of huge fines but also the guarantee of no prosecution. Penalty is 20% of the maximum aggregate dollar value of non-disclosed US accounts still held on 8/1/08. This amount would go up to 30% for secret accounts established after that time but before February 2009. The penalty is 50% for secret accounts set up after this date.
Also part of the deal, the banks would have to give information about accounts of US taxpayers that have indirect or direct interest, work with treaty requests, disclose information about other financial institutions that either moved money into secret accounts or accepted the money when these accounts were closed, and terminate accounts of holders who don’t agree to comply with US reporting duties.
In 2009, it was UBS (UBS) that entered into a deferred prosecution deal with the DOJ in which it admitted to helping American citizens hide their money outside this country. Not only did the bank pay the US government $780 million but also UBS gave the authorities over 4,000 names to avoid prosecution.
Credit Suisse Settlement with U.S. Could Top $800 Million, January 22, 2014
Swiss banks agree to U.S. plan on tax evasion, MarketWatch, December 10, 2013
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Fannie Mae Sues UBS, Bank of America, Credit Suisse, JPMorgan Chase, Citigroup, & Deutsche Bank, & Others for $800M Over Libor, Institutional Investor Securities Blog, December 14, 2013
UBS’s Anticipated Defenses in the UBS Puerto Rico Fund Cases, Stockbroker Fraud Blog, January 21, 2014