Credit Suisse unit pleads guilty to U.S. tax evasion charges

[UNITED STATES] A unit of Credit Suisse pleaded guilty on May 5 to U.S. charges related to helping wealthy American clients evade taxes, agreeing to pay a fine exceeding $510 million, the U.S. Department of Justice announced.

Credit Suisse Services AG was penalized for conspiring to conceal over $4 billion from the U.S. Internal Revenue Service (IRS) across at least 475 offshore accounts, the department revealed.

The case underscores the continued efforts by U.S. authorities to clamp down on offshore tax evasion, particularly involving Swiss banks, which have long been under the spotlight due to their secrecy laws. Over the past decade, the U.S. has vigorously pursued both financial institutions and individuals who hide assets abroad, recovering billions of dollars in unpaid taxes and penalties.

The guilty plea stems from Credit Suisse’s maintenance of accounts in Singapore for U.S. taxpayers who used these offshore accounts to avoid U.S. tax reporting obligations, according to the Justice Department.

Singapore, like Switzerland, has faced mounting pressure from global regulators to tighten scrutiny of its private banking sector. While the city-state has implemented stronger anti-money laundering regulations in recent years, this case highlights the persistent challenges of policing cross-border tax evasion, particularly when sophisticated clients and multiple jurisdictions are involved.

“Bankers at Credit Suisse falsified records, processed fictitious donation documents, and handled over $1 billion in accounts without verifying tax compliance,” the Justice Department stated. “In doing so, Credit Suisse AG committed further crimes and violated its May 2014 plea agreement with the United States.”

In 2014, Credit Suisse became the largest bank in two decades to plead guilty to a U.S. criminal charge, agreeing to pay a $2.5 billion fine for aiding Americans in evading taxes in a long-running conspiracy.

That 2014 settlement was viewed as a significant milestone in holding global banks accountable for facilitating tax fraud. However, the latest violations suggest deeper systemic issues within Credit Suisse’s compliance structures, raising concerns about whether stricter oversight or reform was necessary after the initial settlement.

Before the May 5 agreement, the U.S. Senate Finance Committee had found in 2023 that Credit Suisse had breached its 2014 deal by continuing to assist in tax evasion, including hiding more than $700 million from U.S. authorities.

UBS confirmed on May 5 that Credit Suisse Services pleaded guilty to one count of conspiracy to assist in preparing false income tax returns.

The news arrives at a challenging moment for UBS, which last year completed its emergency acquisition of Credit Suisse amid fears of a global banking crisis. Analysts suggest that the legal fallout could complicate UBS’s efforts to integrate its ailing rival, especially as regulators intensify their scrutiny of the merged entity’s compliance practices.

UBS emphasized that it was not involved in the underlying conduct, which occurred before the bank’s acquisition of Credit Suisse in 2023.

When UBS acquired Credit Suisse, it had accounted for the issue as a contingent liability and expects to release part of that as a credit in the second quarter. The bank also anticipates recording a charge related to the payment during that time.

In addition to the guilty plea and fine, Credit Suisse Services entered into a non-prosecution agreement that obligates both it and UBS to cooperate with ongoing investigations and to disclose any future information regarding U.S.-related accounts, according to the Justice Department.

Legal experts point out that non-prosecution agreements have become more common in corporate settlements, allowing authorities to gain cooperation while avoiding the destabilizing effects of a full indictment. However, critics argue that without stricter penalties, repeat offenses may continue, as evidenced by Credit Suisse’s persistent violations.