Dive Brief:

• Credit Suisse Services AG, now owned by UBS, has agreed to pay more than $510 million to settle a yearslong investigation into how the lender helped taxpayers hide assets and income in offshore accounts for more than a decade, the Justice Department said Monday.
• Credit Suisse pleaded guilty to conspiring to hide more than $4 billion from the Internal Revenue Service in at least 475 offshore accounts.
• The Swiss bank also signed a non-prosecution agreement, agreed to assist the Justice Department in its ongoing probe, and paid significant monetary penalties for maintaining accounts in Singapore on behalf of U.S. taxpayers who were using offshore accounts to evade U.S. taxes and reporting requirements.

Dive Insight:

From Jan. 1, 2010, until at least July 2021, Credit Suisse, which had ultra-high and high-net worth clients across the globe, conspired to “willfully” help U.S. customers conceal their ownership and control of assets and funds held at the bank, according to the plea agreement, NPA, and documents filed in court Monday.

Customers avoided their tax obligations by opening and maintaining undeclared offshore accounts for U.S. taxpayers at Credit Suisse. The lender also provided several offshore private banking services that helped taxpayers conceal their assets and income from the IRS, failing to file certain reports.

Credit Suisse falsified records, processed fictitious donation documents, and serviced over $1 billion in accounts without documentation of tax compliance.

“In doing so, Credit Suisse AG committed new crimes and breached its May 2014 plea agreement with the United States,” the DOJ noted. 

In that 2014 plea deal, Credit Suisse admitted to assisting U.S. taxpayers in hiding offshore accounts from the IRS. The lender had to pay $2.6 billion—the largest payment to date in a criminal tax case, the DOJ said at the time. The probe also led to the indictment of eight Credit Suisse executives.

UBS acquired Credit Suisse in a $3.25 billion government-orchestrated deal in March 2023. The Swiss banking giant said in a statement Monday that Credit Suisse agreed with the DOJ “to settle a long-running tax-related investigation into Credit Suisse’s implementation of its 2014 plea agreement, relating to its legacy cross-border business with US taxpayers booked in Switzerland, which began before UBS acquired Credit Suisse.”

Credit Suisse pleaded guilty to one count of conspiracy to aid and assist in the preparation of false income tax returns and will pay $371.9 million. The lender has also “contemporaneously” entered into a non-prosecution agreement regarding U.S. taxpayers booked in the legacy Credit Suisse Singapore booking center, and will pay $138.7 million, UBS noted.

“UBS was not involved in the underlying conduct and has zero tolerance for tax evasion,” UBS said. “With this resolution, UBS is pleased to have resolved another of Credit Suisse's legacy issues, in line with UBS’s intention to resolve legacy matters at pace in a fair and balanced way and in the best interest of all its stakeholders.”

In the second quarter, UBS expects to record a charge concerning the resolution.

UBS must cooperate fully with the ongoing investigation and report any information about U.S. accounts discovered during the process, the DOJ said.

“The agreements provide no protections for any individuals,” the DOJ clarified. 

Credit Suisse maintained undeclared U.S. accounts valued at over $2 billion between 2014 and 2023. After the merger with UBS, the acquirer discovered undeclared accounts and immediately froze suspicious accounts, voluntarily reported them to the Justice Department, conducted internal investigations, and cooperated with authorities, the DOJ noted. 

The settlement was reached about two years after a Senate Finance Committee investigation found that Credit Suisse violated the plea agreement, failing to report a potential ongoing criminal tax conspiracy involving nearly $100 million in secret offshore accounts belonging to a family of dual U.S.-Latin American citizens. Though those accounts were closed in 2013, the funds were transferred to other banks without notifying the DOJ – a requirement of the 2014 plea agreement.

The committee also found records detailing Credit Suisse employees’ role in helping U.S. businessman Dan Horsky conceal over $220 million in offshore accounts from the IRS, according to the inquiry.

Horsky pleaded guilty in 2016.

Finance Committee Ranking Member Ron Wyden, D-OR, who was involved in the report, called for the criminal prosecution of Credit Suisse bankers and advisers who helped wealthy clients evade taxes.

“This settlement fully vindicates the findings of my investigation, which exposed how Credit Suisse kept hiding more than $700 million offshore for rich Americans in violation of their deal to avoid prosecution,” Wyden said in a statement Monday. “The ultra-wealthy and shady Swiss bankers shouldn’t get a free pass to cook up offshore tax evasion schemes when regular Americans are paying their fair share.”

Earlier this year, a Senate Budget Committee investigation revealed Credit Suisse had more Nazi-linked accounts than previously known and obscured such information in the past.