Laundering for tax evasion: Credit Suisse pays 238 million euros to avoid criminal prosecution in France

published on Monday, October 24, 2022 at 5:04 p.m.

Credit Suisse, Switzerland’s No. 2 bank, agreed on Monday to pay 238 million euros in France to avoid criminal prosecution for illegal customer recruitment and aggravated money laundering for tax fraud between 2005 and 2012.

This agreement, validated this Monday by the president of the Paris court, comes a week after the resolution of a dispute in the United States, related to mortgage-backed securities, and before a much-anticipated point on Thursday about the plans of the new boss, Ulrich Körner, to straighten out the number two in the Swiss banking sector, rocked by repeated scandals.

The update of its strategy has given rise to intense speculation, especially about the amount of a possible capital increase and the assets that the bank could sell to find funds to finance its restructuring. But investors are also paying close attention to dispute bills to gauge how much the bank will need.

– Test avoided –

By agreeing to sign this public interest legal agreement (Cjip) with the National Financial Prosecutor’s Office (PNF), Credit Suisse AG avoids a lawsuit in France and settles its dispute with both the tax authorities, to whom it will pay €115 million in damages and damages, only with the Public Ministry, paying a fine of 123 million euros.

The investigation by the Financial Prosecutor’s Office began in April 2016 after receiving complaints in the framework of mutual financial assistance for money laundering, tax evasion and illegal direct banking.

The investigations revealed that 5,000 French clients had had a Credit Suisse account for several decades, which had not been declared to the French tax authorities.

The hidden assets amounted to 2,000 million euros, recalled the president of the court Stéphane Noël. Treasury imposed an adjustment to all customers, for a total amount of 168 million euros.

“Credit Suisse did not send any account statement. The prospecting did not comply with French law, the sales representatives traveled to France, in all discretion, “in hotels, restaurants, never in the official facilities of the French establishment.”

The PNF calculated the fine taking into account “increasing factors”, namely “the systemic nature, a prolonged period, the creation of tools to hide”, detailed the prosecutor François-Xavier Dulin. “The bank has created offshore structures to help its clients in their desire not to declare certain assets to the French administration,” he stressed.

The established arrangements allowed clients who wished to remain anonymous, specifies the public interest legal agreement.

The PNF also took into account the “minor” factors that are the “corrective measures taken by the bank, the bank’s cooperation (justly), the compensation of 115,000 million” to the tax authorities.

– A page turns” –

The bank has twelve months to pay these sums, in three installments. “It is a historical page, the vestige of an ancient era that the bank has just established,” the bank’s lawyer, Charles-Henri Boeringer, insisted during the hearing.

In a press release, Credit Suisse recalled that this public interest court settlement did not include an admission of guilt and marked “an important step in the proactive resolution” of disputes.

Before Credit Suisse, HSBC Private Bank, the Swiss subsidiary of British banking giant HSBC, had already agreed to pay €300 million to escape trial in France for tax fraud laundering in November 2017.

Last week, Credit Suisse also reached a settlement with the New Jersey attorney general to resolve a dispute over mortgage-backed securities. This was Credit Suisse’s last dispute in the United States over these structured products, which were at the heart of the 2008 financial crisis.

Heavily disrupted in recent weeks, the stock rallied up more than 2.3% by mid-afternoon on the Swiss Stock Exchange, investors hailing the settlement of yet another dispute.

In mid-October, the rating agency Standard & Poor’s stressed that until these past disputes were resolved they would continue to “obscure visibility” on the bank’s finances.

In 2014, Credit Suisse had to pay a hefty $2.6 billion fine in the United States after pleading guilty to helping clients lie to US tax authorities to hide assets and income in unreported accounts.

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