Credit Suisse’s recent violation of a 2014 plea agreement with the US DOJ and its complicity in tax evasion by rich clients.

The US Senate Finance Committee’s two-year inquiry revealed that Credit Suisse, a troubled Swiss bank, violated the terms of a 2014 plea agreement with the US Department of Justice (DOJ). On Wednesday, lawmakers said that the bank had helped extremely rich American clients avoid paying taxes by concealing nearly $700 million in unreported accounts.

Contract violation reported by US Committee

The Committee also discovered that a single family of US-Latin American residents had roughly $100 million stored in covert offshore accounts for almost ten years without disclosing it to US tax authorities. Also, the Committee thinks the bank assisted a US businessman in hiding more than $220 million in offshore accounts from the US Federal Tax Agency, according to Reuters. It called this a “ongoing potentially criminal conspiracy.”

After pleading guilty to assisting clients’ tax evasion in 2014 and agreeing to divulge undeclared accounts and other information to US authorities, Credit Suisse paid a reduced payment to the DOJ. Recently, they informed the Committee that they had not declared 23 accounts worth over $20 million for taxation.

Credit Suisse responded to the incident by telling Reuters that it does not support tax evasion and has been working with US authorities. The Swiss bank told the Associated Press that the evasion was ongoing and long resolved.

New obstacle

UBS said last month that it will buy Credit Suisse for CHF 3 billion by the end of 2023. Recent American bank failures have made Credit Suisse’s financial issues worse. UBS rehired former CEO Sergio P. the same day the US Senate Finance Committee report was released. Ermotti to oversee the complex acquisition of Credit Suisse, the second-largest Swiss institution.

If the recent US Committee report will have an impact on USB acquisition practices is still up in the air.

Credit Suisse settled pre-2008 financial crisis mortgage-backed securities concerns last year for $495 million. But the company is currently facing new legal problems with US regulators. The first Swiss bank criminal prosecution found the bank guilty.

UBS and Credit Suisse are expected to merge to form a Swiss megabank with invested assets exceeding $5 trillion.

Tax Evasion
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