Swiss banking giant Credit Suisse stands accused of helping American customers avoid billions of dollars in tax.
An investigation by a US congressional committee claims the bank had 22,000 US customers holding £7.2 billion in cash and assets hidden in secret accounts at one time and actively encouraged many customers to cheat on their taxes.
The bank deliberately created sham companies and false paper trails to try to fool the Internal Revenue Service (IRS) that customers owed little or no tax.
Credit Suisse is refusing to comment on the report.
“From around 2001 to 2008, Credit Suisse helped US customers evade tax,” said the report.
Conspiracy to deceive
Congress is scrutinising the activities of 14 Swiss banks accused of helping customers avoid tax in the US.
The report accuses Credit Suisse of active involvement in a sophisticated and long term conspiracy to help US customers avoid paying taxes.
Some of the tactics included:
- Opening Swiss bank accounts that were not declared to tax authorities
- Concealing ownership of accounts by US customers with false details
- Dealing with US customers without recording interviews, calls or leaving a paper trail
- Handing bank statements to customers hidden in magazines and newspapers
- Dealing with financial matters in a sound-proof lift to avoid eavesdropping
Although Credit Suisse has not commented on the allegations, senior officials have reportedly set aside nearly £120 million to try to halt the US investigation.
Threat of fines
The bank could face millions of dollars in fines.
The oldest Swiss bank, Wegelin, closed in January 2013 after a fine of nearly $60 million was imposed for similar tax avoidance offences in the US involving 100 customers and $1.2 billion of hidden tax.
Credit Suisse is a global bank and one of Switzerland’s largest financial firms.
During the ongoing investigation, the bank has said officials are negotiating a resolution with US prosecutors, but no details have been released.
“International financial institutions have profited from operating in tax havens for too long and have helped taxpayers evade billions of dollars,” said Senator John McCain, a member of the committee producing the report.
“Federal regulators should use every legal tool at their disposal to hold these banks accountable for wilfully deceiving the US government and seek penalties that will deter similar misconduct in the future.”
The investigation is one of the reasons for the introduction of the Foreign Account Tax Compliance Act (FATCA) from July 1, which requires foreign financial institutions and US taxpayers to declare money in bank accounts and investments outside the US.