Credit Suisse has an illustrious history of quietly handling the affairs of foreign clients with care and service that overlooked regulatory reporting. Offering opaque foreign bank accounts, Credit Suisse was eventually found to be catering to criminal enterprises, global money laundering, and tax evasion. What was once a virtue is now considered a vice by the legitimate investing community, and Credit Suisse was unable to rehabilitate itself and sold to UBS for $3.2 billion in 2023.
In early May, splashy headlines announced a new offshore tax deal between the Department of Justice (DOJ) and Credit Suisse. No stranger to a plea deal, Credit Suisse pleaded guilty to concealing more than $4 billion from the Internal Revenue Service (IRS) from 475 offshore tax accounts. Prosecutors noted that the bank assisted its “U.S. customers to evade their U.S. tax obligations in several ways, including by opening and maintaining undeclared offshore accounts for U.S. taxpayers at Credit Suisse A.G., and providing a variety of offshore private banking services that assisted U.S. taxpayers in the concealment of their assets and income from the IRS.”
The allegations center around Credit Suisse offshore bank accounts held in Singapore between 2014 and 2023. Credit Suisse maintained an excessively light compliance touch, helping U.S. clients to avoid reporting the accounts and failing to identify the accounts to the IRS. The actions breached a plea agreement that Credit Suisse had entered with the DOJ in 2014.
During its transaction to buy Credit Suisse in 2023, UBS became aware that Credit Suisse had failed to declare the account in Singapore, despite the earlier plea agreement. UBS froze some of the accounts and cooperated with the DOJ in investigating the accounts. Credit Suisse and UBS are both obliged, by virtue of the new plea deal, to disclose similar accounts discovered in the future and cooperate in future investigations.
In addition to its plea, Credit Suisse will pay $510,608,909 to settle the deal. Because UBS was aware of the compliance breach in 2023, funds were earmarked to pay the fines and restitutions ahead.
An important point of this and other deals made by banks that fail to provide appropriate foreign bank account reporting—they do not cover the clients whose accounts are discovered and investigated by the IRS. Fines for willful failure to disclose offshore accounts are serious. If you are not filing accurate Foreign Bank and Financial Accounts Reports (FBAR) as required on your offshore holdings, speak with your tax attorney for a forward strategy.
Offshore reporting can be complicated. If concerned about your required reporting or whether your offshore tax haven is legit or a shell game, the tax attorneys at Robert J. Fedor, Esq., L.L.C. can help. Contact us at 440-250-9709 or set up a consultation for reliable counsel. We offer services to clients in Northeast Ohio, Chicago, New York, and internationally.
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