According to a report released May 16, 2014, financial giant Credit Suisse will be paying $2.5 billion to U.S. authorities in a tax case that’s been under investigation for years. Switzerland’s second largest bank will plead guilty to allegations that it assisted U.S. clients in evading tax liability by creating accounts under bogus names. As Credit Suisse is settling a major tax evasion case, financial news channels cited sources as stating that the arrangement should be finalized by late May.
The Bank Is The First To Admit To Criminal Charges In The U.S. In More Than A Decade
Attorney General Eric Holder says demonstrates that no financial institution is so large as to be above the law. The allegations in the case argue that Credit Suisse went to lengths to protect itself, its employees and clients from accountability for the criminal activities, which included:
- Failing to comply with financial disclosure requirements;
- Destroying bank account records;
- Concealing transactions by limiting withdrawal amounts and employing offshore accounts to payback funds;
- Assisting in concealing account holder assets and income;
- Using sham entities to hide funds; and,
- Other violations of U.S. tax laws.
Credit Suisse settling the major tax evasion case will involve a series of payments, including a penalty and an amount as restitution to the IRS. In addition, a portion of the settlement amount will go to the New York Department of Financial Service and the U.S. Federal Reserve.
Successful prosecutions against large banks in criminal matters are rare, as the financial services industry has long expressed concern that conviction of a crime would result in the institution shuttering its doors. In fact, in 2002 the Arthur Andersen accounting firm faced charges of obstruction of justice related to the disastrous Enron audit. While the conviction was reversed on appeal, the scandal devastated the company.
The most recent global bank to enter a guilty plea in a U.S. court was Credit Lyonnais in 2004, which admitted to making false statements in documents submitted to the Federal Reserve. Other cases involving HSBC and JP Morgan Chase demonstrate regulators’ reluctance to pursue criminal convictions, as both cases were settled with guilty pleas.
Attorney General Holder supported Credit Suisse settling the major tax evasion case, stating that the plea agreement is in line with these other cases. He recognized that criminal cases involving large banks could be potentially catastrophic, especially since they can generate follow-up actions by financial regulatory officials.
Not surprisingly, the Credit Suisse matter has led to calls for the resignations of certain bank executives. Swiss billionaire and political figurehead Christoph Blocher reportedly stated that these officials should step down in order to serve the best interests of the bank.
Despite the fact that Credit Suisse is settling the major tax evasion case and regulators are close to finalizing an agreement, the U.S. Justice Department still wants an admission of guilt in a previous case involving Italy’s BNP Paribas. That organization is accused of wrongdoing in its dealings with Cuba, Iran and Sudan, which violates U.S. trade sanctions.
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Veriti Consulting LLC provides professional fraud investigation services across the U.S. Veriti is also a licensed private investigation agency. Learn more about our financial investigator services by calling 855.232.4410 or contact us via email.
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