Credit Suisse case called warning to foreign banks
By Marcy Gordon and Eric Tucker, AP
May 21, 2014, 12:06 am TWN
WASHINGTON--Credit Suisse AG's guilty plea and US$2.6 billion payment in a high-profile case brought by the Justice Department are being held out as a warning to foreign banks believed to be helping U.S. taxpayers conceal assets.
Culminating a years-long criminal investigation, Switzerland's second-largest bank pleaded guilty Monday to helping wealthy Americans avoid paying taxes through secret offshore accounts.
Also, Credit Suisse was the largest bank to plead guilty in more than 20 years.
The settlement resolves the investigation into allegations that Credit Suisse recruited U.S. clients to open Swiss accounts, helped them conceal the accounts from the Internal Revenue Service, the U.S. tax collection agency, and enabled misconduct by bank employees.
The case is part of an Obama administration crackdown on foreign banks believed to be helping U.S. taxpayers hide assets. Justice Department officials said their investigations into secret bank accounts held by Americans in Switzerland and other countries likely will bring forth additional resolutions.
"We are mindful that guilty pleas by a bank can have impacts far beyond" the parties involved in the case, Deputy Attorney General James Cole told reporters.
"This plea demonstrates that the Department of Justice and bank regulators are prepared to hold banks and their relevant employees accountable while being mindful of the impacts on depositors and the American public," he said.
Switzerland's largest bank, UBS, in 2009 entered a deferred prosecution agreement with the Justice Department in which it agreed to pay US$780 million in fines and turn over the names of thousands of customers suspected of evading U.S. taxes. Switzerland's oldest bank, Wegelin & Co., pleaded guilty in January 2013 to U.S. tax charges, admitting that it helped American clients hide more than US$1.2 billion from the IRS.
In the Credit Suisse case, officials said a criminal charge was necessary to account for the bank's pattern of misconduct, which included a lack of cooperation and document destruction. But the deal was structured in such a way as to allow the bank to continue operating. Zurich-based Credit Suisse is on a regulators' list of 29 "global systemically important banks" whose failures would be considered a threat to the entire financial system.
The US$2.6 billion in penalties — which happens to be roughly equivalent to Credit Suisse's net income for 2013 — will be paid to the Justice Department, the Federal Reserve and the New York State Department of Financial Services.
Attorney General Eric Holder, criticized last year after telling Congress that large banks had become hard to prosecute, appeared to foreshadow the guilty plea in a video message earlier this month in which he said no financial institution was "too big to jail."