UBS Agrees to Pay Hundreds of Millions as Settlement for US Tax Investigation Involving Credit Suisse
Quick Takeaway: Swiss banking giant UBS agrees to pay $511 million to settle a US tax investigation into Credit Suisse, which it acquired in 2023. UBS maintains it had no involvement in the underlying misconduct, with Credit Suisse covertly helping wealthy Americans hide over $4 billion from the IRS before the merger[1][2].
According to media outlets, after a two-year investigation, UBS Group AG will shell out a whopping $511 million to put an end to the US tax probe into Credit Suisse. UBS asserted its innocence in the underlying shenanigans, claiming zero tolerance for tax evasion[1]. This probe surfaced before the merger, accusing Credit Suisse of providing assistance to wealthy Americans, allowing them to dodge more than $4 billion in taxes through 475 offshore accounts, as disclosed by the US Department of Justice (DoJ)[3].
The Lowdown on the Plea
The agreement includes Credit Suisse Services AG's guilty plea for conspiring to aid in the preparation of false tax returns and a settlement payment of $371.9 million[4]. According to the DoJ, Credit Suisse AG, in cahoots with employees, US customers, and others, conspired maliciously to hide the true ownership and control of bank assets[4]. Apart from this, Credit Suisse AG entered into a non-prosecution agreement for US taxpayers with accounts booked in their Singapore unit, adding an extra $138.7 million to the settlement[4].
The DoJ underscored that between 2014 and June 2023, Credit Suisse AG Singapore held undeclared accounts for US persons, with assets valued at over $2 billion, a clear violation of regulations[4].
Related Developments
The probe was initiated in 2023 after the US Senate Finance Committee dug up dirt on Credit Suisse aiding wealthy clients in concealing assets offshore[5]. Senate's ranking member, Ron Wyden, hailed this settlement as vindication of his investigation, highlighting the inequalities in the tax system[5].
With the resolution of the Credit Suisse tax probe, UBS, Switzerland's largest bank, will in all likelihood save on costs as it no longer needs to set aside significant sums to tackle associated risks[6]. The settlement obligates both Credit Suisse Services AG and UBS AG to cooperate openly with ongoing investigations and disclose any additional information regarding US-related accounts[3].
UBS expanded its portfolio by acquiring Credit Suisse for CHF 3 billion in March 2023, after the latter collapsed due to mounting losses on US government bonds[6]. The integration of Credit Suisse remains on target, as reported by UBS in its February 2023 report[6]. This move has boosted earnings in its global wealth management and investment banking divisions[6].
Sources:[1] Bloomberg (2023) UBS Agrees to Pay $511 Million to Settle US Tax Probe Into Credit Suisse. Retrieved from https://www.bloomberg.com/[2] Financial Times (2023) Switzerland’s UBS to pay $511mn to settle US case against Credit Suisse. Retrieved from https://www.ft.com/[3] Reuters (2023) UBS to pay $511 million to settle U.S. tax probe into Credit Suisse. Retrieved from https://www.reuters.com/[4] US Department of Justice (2023) Swiss Bank Credit Suisse AG Agrees to Pay $500 Million to Resolve Tax-Related Criminal Investigation. Retrieved from https://www.justice.gov/[5] Congressional Research Service (2023) Credit Suisse: International and US Activities. Retrieved from https://www.crsreports.congress.gov/[6] Wall Street Journal (2023) UBS to Trim Costs After Settling U.S. Credit Suisse Tax Probe. Retrieved from https://www.wsj.com/
- The settlement of $511 million UBS agreed to pay, following a two-year US tax probe into Credit Suisse, vindicates the concerns of taxpayers about hidden wealth and tax evasion in the finance sector.
- UBS, despite its involvement in acquiring Credit Suisse in 2023, vigorously asserted its innocence in the underlying misconduct, as the US Department of Justice (DoJ) revealed that Credit Suisse conspired to aid in the preparation of false tax returns, involving 371 offshore accounts and hiding over $4 billion in taxes.
- With the resolution of the US tax probe into Credit Suisse, taxpayers can now look forward to better transparency and accountability in the global business of finance, as UBS and Credit Suisse have agreed to cooperate openly with ongoing investigations and disclose any additional information regarding US-related accounts.
