The Senate Finance Committee’s Democratic staff said Credit Suisse failed to report bank transfers tied to what it says may be an ongoing criminal tax conspiracy involving more than $100 million held by a family with dual citizenship in the U.S. and Latin America.
The bank also, partly in response to the committee inquiry, recently identified more accounts that may be tied to Americans.
“It is deeply concerning that almost nine years after executives testified before Congress that the bank would clean up its act, Credit Suisse is still disclosing hundreds of millions of dollars in secret offshore accounts belonging to wealthy U.S. taxpayers,” the report said.
The findings are another setback for Credit Suisse, which is being bought by rival
UBS Group AG
UBS 3.94%
in a deal urged and supported by Swiss regulators. UBS agreed to take on Credit Suisse’s substantial legal liabilities in the takeover.
In its 2014 plea agreement with the Justice Department, Credit Suisse admitted that it had helped Americans evade taxes for years. It agreed to pay $2.6 billion and said it would comply with U.S. law.
Justice Department officials found deficiencies in the bank’s handling of its 2014 plea agreement, The Wall Street Journal reported last November, citing people familiar with the case. The bank said at the time it had devoted substantial resources to improve its compliance.
An IRS spokesperson declined to comment. A spokesperson for the Justice Department didn’t immediately respond to a request for comment.
“Credit Suisse does not tolerate tax evasion,” said a Credit Suisse spokesperson. “The report describes legacy issues, some from a decade ago, and we have implemented extensive enhancements since then to root out individuals who seek to conceal assets from tax authorities,” the spokesperson said. The bank is cooperating with the Justice Department to address “remaining legacy conduct or policy concerns,” the spokesperson said.
UBS is expected to close its takeover of Credit Suisse next month.
The Senate report suggests that there are gaps in the U.S. system for finding Americans’ foreign account holdings and calls on the IRS and the Justice Department to investigate further. And it says that the Swiss government or any entity buying Credit Suisse should be responsible for fines stemming from violations of the 2014 plea deal.
For many years, banks in Switzerland and elsewhere enabled tax evasion by wealthy Americans, who could park assets in accounts that weren’t reported to the Internal Revenue Service.
That started changing in the 2000s, and the U.S. used whistleblowers, criminal prosecutions and voluntary-disclosure programs to stem tax evasion by wealthy Americans.
The U.S. Congress in 2010 also passed a law that effectively required foreign banks to report Americans’ accounts to the U.S. government. That law has made banking abroad difficult for U.S. citizens living outside the country, but it has limited any opportunities for Americans to hold secret foreign bank accounts.
The committee started its investigation in April 2021, prompted by the prosecution and guilty plea of businessman Dan Horsky for tax fraud. According to the report, Mr. Horsky controlled $220 million in accounts at the bank but the U.S. government learned of them from a whistleblower, not from Credit Suisse.
Most of that activity occurred before the plea deal but the committee report notes that Mr. Horsky was still being invited to bank events for top customers in 2015.
Mr. Horsky’s case prompted the Senate committee’s investigation into other Credit Suisse clients, including the family with dual citizenship. The report doesn’t identify the family and cites Credit Suisse as saying that the matter involves ongoing cooperation with U.S. law enforcement.
According to the report, Credit Suisse registered the accounts in its system using the non-U.S. documentation in its records, though the bank also had information showing U.S. passports and residences.
Using information provided by Credit Suisse and informants, the committee determined that the family closed eight Credit Suisse accounts in 2012 and 2013, moving the money to banks in Switzerland, Israel and Andorra.
Under its plea agreement, Credit Suisse was supposed to disclose those transfers but didn’t do so for most of them until December 2021, after the Senate investigation started, according to the report.
Jeffrey Neiman, an attorney for the whistleblowers, who could receive a monetary award for their involvement, said the Justice Department should collect $1.3 billion because of Credit Suisse’s failure to abide by the plea agreement, regardless of the bank’s current financial troubles and takeover.
Write to Richard Rubin at richard.rubin@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
The Senate Finance Committee’s Democratic staff said Credit Suisse failed to report bank transfers tied to what it says may be an ongoing criminal tax conspiracy involving more than $100 million held by a family with dual citizenship in the U.S. and Latin America.
The bank also, partly in response to the committee inquiry, recently identified more accounts that may be tied to Americans.
“It is deeply concerning that almost nine years after executives testified before Congress that the bank would clean up its act, Credit Suisse is still disclosing hundreds of millions of dollars in secret offshore accounts belonging to wealthy U.S. taxpayers,” the report said.
The findings are another setback for Credit Suisse, which is being bought by rival
UBS Group AG
UBS 3.94%
in a deal urged and supported by Swiss regulators. UBS agreed to take on Credit Suisse’s substantial legal liabilities in the takeover.
In its 2014 plea agreement with the Justice Department, Credit Suisse admitted that it had helped Americans evade taxes for years. It agreed to pay $2.6 billion and said it would comply with U.S. law.
Justice Department officials found deficiencies in the bank’s handling of its 2014 plea agreement, The Wall Street Journal reported last November, citing people familiar with the case. The bank said at the time it had devoted substantial resources to improve its compliance.
An IRS spokesperson declined to comment. A spokesperson for the Justice Department didn’t immediately respond to a request for comment.
“Credit Suisse does not tolerate tax evasion,” said a Credit Suisse spokesperson. “The report describes legacy issues, some from a decade ago, and we have implemented extensive enhancements since then to root out individuals who seek to conceal assets from tax authorities,” the spokesperson said. The bank is cooperating with the Justice Department to address “remaining legacy conduct or policy concerns,” the spokesperson said.
UBS is expected to close its takeover of Credit Suisse next month.
The Senate report suggests that there are gaps in the U.S. system for finding Americans’ foreign account holdings and calls on the IRS and the Justice Department to investigate further. And it says that the Swiss government or any entity buying Credit Suisse should be responsible for fines stemming from violations of the 2014 plea deal.
For many years, banks in Switzerland and elsewhere enabled tax evasion by wealthy Americans, who could park assets in accounts that weren’t reported to the Internal Revenue Service.
That started changing in the 2000s, and the U.S. used whistleblowers, criminal prosecutions and voluntary-disclosure programs to stem tax evasion by wealthy Americans.
The U.S. Congress in 2010 also passed a law that effectively required foreign banks to report Americans’ accounts to the U.S. government. That law has made banking abroad difficult for U.S. citizens living outside the country, but it has limited any opportunities for Americans to hold secret foreign bank accounts.
The committee started its investigation in April 2021, prompted by the prosecution and guilty plea of businessman Dan Horsky for tax fraud. According to the report, Mr. Horsky controlled $220 million in accounts at the bank but the U.S. government learned of them from a whistleblower, not from Credit Suisse.
Most of that activity occurred before the plea deal but the committee report notes that Mr. Horsky was still being invited to bank events for top customers in 2015.
Mr. Horsky’s case prompted the Senate committee’s investigation into other Credit Suisse clients, including the family with dual citizenship. The report doesn’t identify the family and cites Credit Suisse as saying that the matter involves ongoing cooperation with U.S. law enforcement.
According to the report, Credit Suisse registered the accounts in its system using the non-U.S. documentation in its records, though the bank also had information showing U.S. passports and residences.
Using information provided by Credit Suisse and informants, the committee determined that the family closed eight Credit Suisse accounts in 2012 and 2013, moving the money to banks in Switzerland, Israel and Andorra.
Under its plea agreement, Credit Suisse was supposed to disclose those transfers but didn’t do so for most of them until December 2021, after the Senate investigation started, according to the report.
Jeffrey Neiman, an attorney for the whistleblowers, who could receive a monetary award for their involvement, said the Justice Department should collect $1.3 billion because of Credit Suisse’s failure to abide by the plea agreement, regardless of the bank’s current financial troubles and takeover.
Write to Richard Rubin at richard.rubin@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8