Credit Suisse has violated U.S. tax evasion deal, Senate Committee finds

LONDON (Reuters) -Credit Suisse violated a 2014 plea deal with U.S. authorities by continuing to help ultra-wealthy Americans evade taxes and concealing more than $700 million from the government, the U.S. Senate Finance Committee found on Wednesday.

After concluding a two-year investigation into Credit Suisse – which this month agreed to a rescue takeover by rival UBS – the committee said it had uncovered “major violations” of the 2014 agreement between the Swiss lender and the U.S. Department of Justice (DoJ) for enabling tax evasion.

New owner UBS or the Swiss government should assume responsibility for any future fines, the committee said, calling on the DoJ and the Internal Revenue Service to investigate whether Credit Suisse should face more penalties.

The violations found by the committee included failing to disclose nearly $100 million in secret offshore accounts belonging to a single family of dual U.S.-Latin American citizens, which it said represented an “ongoing and potentially criminal conspiracy”.

In an emailed statement, Credit Suisse said it did not tolerate tax evasion and had been cooperating with U.S. authorities.

“Credit Suisse‘s new leadership team has cooperated with the Committee’s inquiry and has supported the work of Senator Wyden, including in respect of suggested policy solutions to help strengthen the financial industrys ability to detect undisclosed U.S. persons,” the bank said, referring to Senate Finance Committee Chairman Ron Wyden.

In a statement Wyden said: “At the center of this investigation are greedy Swiss bankers and catnapping government regulators, and the result appears to be a massive, ongoing conspiracy to help ultra-wealthy U.S. citizens to evade taxes and rip off their fellow Americans.”

Representatives for the U.S. Justice Department did not immediately respond to a request for comment.

Credit Suisse in 2014 became the largest bank in 20 years to plead guilty to a U.S. criminal charge, agreeing to pay a $2.5 billion fine for helping Americans evade taxes in a conspiracy that spanned decades.

It was one of a string of scandals that rocked Switzerlands second-biggest lender and contributed to it being forced into the arms of UBS.

Last year it pled guilty to defrauding investors over an $850 million loan to Mozambique and in June the bank was convicted by Switzerlands Federal Criminal Court of failing to prevent money-laundering by a Bulgarian cocaine trafficking gang.

Swiss authorities engineered the rescue of Credit Suisse earlier this month as they scrambled to prevent the lender from collapsing. UBS on Wednesday rehired Sergio Ermotti as chief executive to steer the takeover.

‘THE FAMILY’

According to the committee, Credit Suisse bankers helped the family of U.S.-Latin American citizens – referred to as “The Family” – hide nearly $100 million from the U.S. taxman and let the tax evasion continue undetected for almost a decade.

Its bankers masked the fact that members of the family held American citizenship and then when shutting the accounts in 2013 transferred the funds to other banks in Switzerland and elsewhere without notifying the Department of Justice, as the 2014 plea deal required.

Credit Suisses former head of private banking for Latin America played a significant role in managing the account, the committee said. A source familiar with the matter said the account was known as “The Colombian family”.

The bank only disclosed the accounts, as well as those used by a U.S. businessman to conceal more than $220 million, after whistleblowers contacted U.S. authorities, the committee said.

“The Committee believes the conduct of ultra-high net worth tax evaders at Credit Suisse and other banks in Switzerland just scratches the surface,” it said.

(Reporting by Tommy Reggiori Wilkes and Stefania Spezzati in London and Mrinmay Dey in Bengaluru; Additional reporting by Susan Heavey in Washington; Editing by Louise Heavens, David Holmes and Jonathan Oatis)