Swiss banks have a long-standing reputation for being a secure and secretive place to store one’s wealth. Now, the US Department of Justice has called one of those banks out for its shady dealings in helping U.S. citizens hide billions of dollars in assets. Credit Suisse, a major Swiss banking institution, has agreed to pay a $2.6 billion fine in response to charges they knowingly facilitated tax evasion for thousands of U.S. citizens by helping them hide billions in assets.
This scandal arose in 2013 when US authorities started investigating Swiss banks in an effort to crack down on tax evasion and gain access to financial data. As part of the settlement, Credit Suisse plead guilty to one count of offending withholding taxes and will pay a $2.6 billion penalty. This includes a payment of $1.8 billion to the US Department of Justice and another $715 million to the IRS – together they form the largest single fine for a bank dealing with US accounts and the first conviction of a major bank in the ongoing offshore account scandal.
The fine is set to have an impact on Credit Suisse’s profits, with the bank planning to pay €122.9 million in individual renummations for the 2013 to 2016 financial year. This amount includes legal and other fees to cover the fines.
This is not the first time US authorities have cracked down on Swiss banks. Last July, UBS, another Swiss banking giant, also had to pay a hefty $780 million fine after admitting to helping Americans evade taxes in Switzerland with hidden offshore accounts.
The Credit Suisse incidents reveals the significance of the US Department Justice’s efforts to crack down on offshore tax evasion. It also highlights how important it is for banks to comply with US regulations and strengthen their internal AML (Anti-Money Laundering) procedures to prevent any criminal activities. Credit Suisse has agreed to reinforce its own anti-money laundering system and will now be subject to regular monitoring from the DoJ.
Ultimately, this settlement provides an important lesson for both banks and citizens alike. Tax evasion is a crime and banks should strive to be more compliant with the US law. On the other hand, US citizens should be aware that attempting to hide income and assets abroad won’t end well.