Credit Suisse Helped Rich Americans Evade Billions In Taxes: Senate Subcommittee Report

Credit Suisse (NYSE:CS), the Zurich-based banking giant, helped wealthy Americans hide billions of dollars from U.S. tax collectors over several years, according to a U.S. Senate subcommittee report released Wednesday.

The report, which follows a two-year investigation into the matter, said that the Swiss bank opened accounts for 22,000 U.S. customers owning assets worth between $10 billion to $12 billion. The committee also accused U.S. law enforcement of failing to adequately hold the tax evaders and the bank accountable for their actions.

"The Credit Suisse case study shows how a Swiss bank aided and abetted U.S. tax evasion, not only from behind a veil of secrecy in Switzerland, but also on U.S. soil by sending Swiss bankers here to open hidden accounts,” U.S. Senator Carl Levin (D-Mich.) who is the Chairman of the subcommittee, said in a statement. Levin added that the Department of Justice, or the DOJ, also failed to use U.S. legal tools but instead “used treaty requests for U.S. client names, relying on Swiss courts with predictably poor results.”

The prosecutors, who are after 14 Swiss banks to study their role in helping wealthy Americans dodge taxes, also stated that Swiss officials are preserving their banks’ secrets by intervening in U.S. criminal investigations by restricting the banks from handing over documents demanded by U.S. investigators.

According to BBC, Credit Suisse’s private banking and wealth management department has set aside 175 million Swiss francs ($197 million) to fight U.S. investigations into their hidden offshore accounts.

Credit Suisse’s response was termed “inadequate” by the committee because the bank took more than five years to close undeclared accounts by U.S. customers, and failed to identify undeclared accounts hidden from U.S. authorities.

In 2008, Zurich-based UBS (NYSE:UBS) had come clean about its role in U.S. tax evasion and had a $780 million settlement with the DOJ, the Washington Post reported. But, the Senate subcommittee report claims Credit Suisse has not been so forthcoming. Credit Suisse reportedly did not comment on the Senate report's findings.

“After the UBS scandal broke, Credit Suisse began a series of Exit Projects, and took five years to close Swiss accounts held by 18,900 U.S. clients, leaving just 3,500 U.S. customers still with the bank. Credit Suisse also conducted an internal investigation, but produced no report and identified no leadership failures that allowed the bank to become involved in tax evasion,” the statement from the committee said.

The committee called on U.S. regulators to help prevent tax evasion by ratifying a U.S.-Switzerland tax treaty to improve disclosure standards, and asked the DOJ to use every legal tool at its disposal to deter misconduct and begin a probationary period of increased reporting requirements for new accounts.

"For too long, international financial institutions like Credit Suisse have profited from their offshore tax haven schemes while depriving the U.S. economy of billions of dollars in tax revenues by facilitating U.S. tax evasion," Senator John McCain (R-Ariz.), a ranking member of the subcommittee, said in the statement.