Swiss bank Credit Suisse and the US Department of Justice have reached agreement and signed a deal where the bank agrees it helped US clients evade taxes and the US will receive client information from the bank. The bank entered a guilty plea to “one count of conspiracy to assist US customers in presenting false income tax returns to the US Internal Revenue Service in violation of Title 18, US Code section 371 in connection with the former Swiss-based cross border private banking business,” according to the bank’s statement.
The US DOJ acknowledged that the bank has ended this line of business and it thanked the Swiss government for its help.
“We also appreciate that Switzerland has taken important steps to ensure that its banking community will no longer be a haven for U.S. tax evasion. Switzerland’s ratification, in September 2009, of the Protocol amending U.S.–Swiss tax treaty, and its inter-govermental agreement with the United States concerning FATCA implementation, were significant steps toward this goal. We are also grateful for the support of the Swiss Financial Market Supervisory Authority, FINMA, and the Swiss government for the Swiss Bank Program that the Department announced in August 2013. Through this program, Swiss banks are cooperating to provide valuable information that will further our global investigations, and those Swiss banks in turn have a path to resolution for past activities.“
Brady Dougan, CEO of Credit Suisse, said that the high level of attention to the legal case in recent weeks has had no material impact on its business. He noted, in the Credit Suisse statement:
“We deeply regret the past misconduct that led to this settlement. The US cross-border matter represented the most significant and longstanding regulatory and litigation issue for Credit Suisse. Having this matter fully resolved is an important step forward for us. We have seen no material impact on our business resulting from the heightened public attention on this issue in the past several weeks. We want to thank our clients and employees for their support as we continued to work through this matter and brought it to a conclusion. We can now focus on the future and give our full attention to executing our strategy.”
The Swiss government issued a statement early Tuesday morning 20 May, reproduced here in full; Bern will be holding a press conference with Eveline Widmer-Schlumpf, finance minister, this morning.
“The Federal Council has taken note of the agreement negotiated between the US Department of Justice and Credit Suisse on resolving issues in Credit Suisse’s past. Under this agreement, Credit Suisse states that it committed the alleged violations and accepts the proposed sanctions. The Federal Council welcomes the fact that it has been possible to find a solution with this agreement which resolves the long-standing conflict between the Department of Justice and Credit Suisse.
In the guilty plea negotiated between Credit Suisse and the Department of Justice, Credit Suisse admits to having committed the violations of US tax law it is accused of and accepts the fine proposed by the US side. The agreement allows the legal disputes to be resolved without a formal indictment and is binding on both parties.
It allows Credit Suisse to put the long-standing legal dispute between both parties to rest. What is also particularly important is that there will be no licence withdrawals with this solution and the use of emergency legislation is not an issue.
Normal administrative assistance channels are available for the delivery of client names. With the entry into force of the Protocol of Amendment which was approved by Switzerland in 2012 but which is still being blocked by the US Senate, group requests will also be possible for tax evasion.”
The US DOJ’s Kathryn Keneally in a press conference expanded on Credit Suisse’s activities and what clients and former clients it will be chasing, but its statement was more conciliatory than most from its tax department.
“Credit Suisse has now acknowledged that it acted in both the United States and Switzerland to aid and abet the use of secret Swiss bank accounts for the evasion of U.S. taxes. As set out in the statement of facts, Credit Suisse assisted its clients in using sham entities, soliciting IRS forms that falsely stated that those sham entities were the beneficial owners of assets in accounts with the bank, and facilitating access to the funds in those accounts in a manner designed to keep the accounts secret. It also failed to preserve documents that would have aided in our investigation. The plea agreement that has been announced today imposes serious consequences on Credit Suisse for this conduct.
We appreciate that Credit Suisse has taken this significant step to accept the consequences of these acts. We also recognize that Credit Suisse has ceased this conduct, and has changed its business operations to ensure that US taxpayers will no longer be able to hide their assets at Credit Suisse. Also, through the information that Credit Suisse has agreed to provide, the Internal Revenue Service and the Department of Justice will be able to make treaty requests to Switzerland for account records. For those account holders who closed their accounts knowing that our investigations were focusing on Credit Suisse, we are obtaining information that is enabling us to follow the funds to other Swiss banks or to banks in other tax haven and bank secrecy countries. By its plea today, Credit Suisse has addressed its past conduct, and is in a position to move beyond these criminal activities.”