Credit Suisse whistleblower claims Swiss Bank helped wealthy Americans evade US taxes for years
Credit Suisse whistleblower claims Swiss Bank helped wealthy Americans evade US taxes for years

Credit Suisse whistleblower claims Swiss Bank helped wealthy Americans evade US taxes for years

Banking 29 March, 2023 3:09 PM

UBS AG took over bankrupt Credit Suisse earlier this month as part of an emergency bailout that could present a host of new regulatory and legal issues for its new owners.

For years the bank provided a safe haven for wealthy American clients to hide assets from the IRS - even when it was arrested and charged with doing the same over a decade ago, according to two former Credit Suisse bankers. they spoke exclusively to CNBC and cooperated with the US government as whistleblowers.

The bank notoriously pleaded guilty to criminal charges in 2014 for "knowingly and willfully" embezzling thousands of dollars.

US clients hide their foreign assets and income from the IRS. At the time, he admitted to using fictitious entities, destroying account records and delivering cash to US clients to avoid IRS detection – and agreed to crack down on US tax cheats at the future as part of his plea deal.

Credit Suisse also agreed to a series of reforms at the time, including disclosing its cross-border activities and cooperating with authorities when they request information.

The now-beleaguered bank appears to be in violation of that agreement, according to a new report from the Senate Finance Committee detailing continued and rampant abuses since then. Released on Wednesday, the report detailing the panel's two-year findings took on added urgency given the impending banking crisis. Earlier this month, the Swiss central bank SNB injected more than $100 billion in liquidity into Credit Suisse to keep it afloat, while the Swiss government agreed to provide UBS with around $9 billion to cover losses in order to undo the takeover.

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'still ongoing'

Senate investigators say new revelations raise questions about how much US money remains hidden in the vaults of a bank whose collapse rocked the foundations of the global banking system .

The Senate report, prepared by the panel's Democratic staff, accused the bank of violating the terms of its 2014 plea deal, which could have cascading consequences if the Justice Department pursues the case. The amount of UBS's potential liability for the report was unclear, but the whistleblower's lawyers argued the bank should pay up to $1.3 billion.

Senate Finance Committee Chairman Ron Wyden said his committee this week received new information from Credit Suisse regarding other undisclosed U.S. accounts held by the bank after 2014.

“It's been happening over the last few days – finding out more money is hidden and there are very real issues here,” Wyden said. “It is clear that now is the time to pursue and ensure that the sanctions send a strong message. of the finance committee, who asked not to be identified because the report had not yet been published."None of the Credit Suisse employees implicated in the scheme to date have suffered any consequences from the United States government for their participation."

Hidden Wealth, enabling no less than 25 American families to hide a combined wealth of over $700 million in banks.

The bank's policy requires it to close unreported accounts when it finds them and to discipline employees who violate its policies, she said. camera and remain anonymous as they said they fear retaliation from the bank, CNBC told CNBC.

They were questioned weeks before Credit Suisse collapsed earlier this month.

Although the bank disclosed and closed many US accounts after a plea deal in 2014, some bankers with wealthy clients changed the nationalities listed on the accounts and provided evidence to keep some Americans in the bank. ignoring that the account holder is a US citizen. In other cases, they helped US customers transfer funds to other banks without reporting those transfers to US authorities, the whistleblowers said.

'Great Pressure'

This report and interviews offer a rare glimpse into the inner workings of Switzerland's mysterious banking industry, a world few outsiders enter. They also show how compliance systems within Credit Suisse broke down in the years leading up to this month's collapse and bailouts by the Swiss government and rival UBS.

Bankers have been pressured to take deposits in banks, the whistleblower said.

"You're under tremendous pressure to bring in these new net assets that will eventually translate into revenue," the first whistleblower said, describing a culture in which bankers are expected to sell the assets of high net worth clients within the bank, even if they cheated to do it. "That's cheating.

You don't want to lose assets. So what you're doing is trying to maintain them in some way.

Senior management called individual bankers to quarterly meetings where they read each banker's asset number. If a banker's phone number dropped, a second whistleblower would say, "You'll be exposed to colleagues. Because of this, he said, "sometimes people can just leave things out.

"'Don't ask, don't tell' might be a good explanation for what happened," he said. “They will have American clients, but they will change their passports to show and report, as if they were not Americans.

For example, Senate investigators said Credit Suisse bankers repeatedly visited in Miami to meet US clients, but did not report them as US citizens.

The first whistleblower said the secrecy had pushed the entire Swiss banking sector to such an extent that the sector might not have survived without it.

“Swiss banks are much more expensive for a reason,” he said. "Why would you pay more if you could choose to go anywhere in the world you want? Why would you go somewhere that's not doing well in terms of return on assets?"

Be the first to report if the client has no assets hidden in Switzerland People used to say: "There is no other reason to be there."


Emails obtained by the Senate Finance Committee show how far bankers have gone to keep their identities secret and ensure that wealthy Americans can change nationality – at least for keeping internal bank records .

In an email, a Credit Suisse banker wrote to another bank employee, "Please do not write or document these matters." The heir to the dollar fortune, he emailed that they had renounced their US citizenship.

"I tried so hard to reach you, congratulations!!!!!!

answered their private banker. "It's a big step for you, and I know it won't be easy."

The heir to the fortune replied: "Thank you... I hope this also makes Credit Suisse more relaxed now.

The heir finished with a laugh.


"The investigation of the committee revealed serious violations of Credit Suisse's plea agreement, including an ongoing and potential criminal tax conspiracy involving nearly $100 million, and dual ownership of undeclared offshore accounts held by identified families in the States -United.

American/Latino citizens,” a committee aide told CNBC.

Credit Suisse closed family-held accounts worth nearly $100 million in 2013 and transferred funds to Switzerland and elsewhere , the assistant told other banks, but did not notify US authorities of the asset transfer until 2021, months after the whistleblower learned of it.

S. Account Existence Permission.

In the Senate report, the clients were not named, simply referred to as "the family".

Although it is legal for Americans to hold money in foreign bank accounts, they must file forms with the IRS to disclose assets and pay taxes on associated gains. US persons must file an information document called the "Foreign Bank and Financial Account Report", known in the industry as "FBAR".

The Committee said the family held assets at Credit Suisse dating back to 1979, and they found evidence that Credit Suisse bankers visited family members in Miami as early as 2000, met at the Mandarin Oriental hotel and dined at the Capital Grille, a restaurant overlooking Biscayne Bay in Miami's trendy Brickell neighborhood. Or pay taxes on their assets. American of a family member.

Legal Jeopardy

As a result, the aide said, “They may be in legal jeopardy, to put it mildly. Officials attended the meeting in Miami. This was remarkable, aides said, because the same official was the manager of several other Credit Suisse bankers previously indicted over U.S. offshore accounts in 2014.

Committee aides complained that Credit Suisse refused to provide the names of the employees involved or the Swiss banks that received the funds - but said they were able to identify this information from other sources.

The Miami affair "is not an easy task", says a Senate aide.

If confirmed, it would be "one of the largest FBAR breaches in US history."

Former Justice Department prosecutor Jeffrey Neiman, who represented the whistleblower, said he believed the fraud was continuing and the Justice Department should recover hundreds of millions of dollars from fines that banks agreed to pay in 2014 but ultimately failed to pay. The bank agreed to pay $2.6 billion, but a federal judge imposed a fine of just $1.3 billion at the time.

"I think Credit Suisse understands Americans who are still hiding money today. I think the banks are doing what they can to do damage control," Neiman said.

$1.3 billion

“At least the United States, The government must raise $1.3 billion for American taxpayers. This bank should be used as an example,” he said. “We hear harsh rhetoric from the Department of Justice about accountability for repeat offenders. Let's see if these words have any practical meaning.

Whistleblowers get financial benefits if more payments are made to the US government. By law, whistleblowers can receive between 15% and 30% of any payment collected by the United States.

governments as a direct result of the information they provide.

The Senate Finance Committee believes US prosecutors' efforts have not gone far enough to hold Credit Suisse accountable, the aide said. The report is part of a campaign to increase pressure on the Justice Department to crack down on UBS, whose recent takeover has thrust it into the spotlight.

Original Story Posted By CNBC