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ILLEGAL ACCOUNTS CASE

US imposes $2.5bn fine on Credit Suisse

Washington, May 20, 2014

Credit Suisse has become the largest bank in 20 years to plead guilty to a US criminal charge, and will pay a $2.5 billion fine to authorities for helping Americans evade taxes, Attorney General Eric Holder said.

But the Swiss bank escaped the worst for its business - its top management stayed in place, and the New York state bank regulator said it had decided not to revoke the bank's license in the state.

US prosecutors said the bank helped clients deceive US tax authorities by concealing assets in illegal, undeclared bank accounts, in a conspiracy that spanned decades, and in one case began more than a century ago.

"This case shows that no financial institution, no matter its size or global reach, is above the law," Holder said at a news conference in Washington.

The Justice Department has not frequently pursued such convictions of financial companies, especially large ones that could become destabilized following an indictment, but US politicians have pushed for tougher punishment for big banks in response to the 2007-2009 financial crisis.

Credit Suisse will pay financial penalties to the US Department of Justice, the Internal Revenue Service, the Federal Reserve and New York's banking regulator, the New York State Department of Financial Services, to settle the matter. It had already paid just under $200 million to the Securities and Exchange Commission.

"We deeply regret the past misconduct that led to this settlement," Credit Suisse Chief Executive Brady Dougan said in a statement. "We have seen no material impact on our business resulting from the heightened public attention on this issue in the past several weeks," he said.

The bank will take an after-tax charge of 1.6 billion Swiss francs ($1.79 billion) in the second quarter, it said, adding it will reduce assets, sell real estate and take other actions to keep its capital at strong levels.

Credit Suisse is the largest bank to plead guilty to a criminal charge in 20 years, Holder said.

Dougan, who has come under pressure from Swiss politicians to resign, and chairman Urs Rohner would both stay in their jobs after the settlement, a person close to Credit Suisse said on Monday. Credit Suisse declined to comment.

HAND-DELIVERED CASH

The US has been trying to wrest client data from Swiss banks in a long-standing spat with Switzerland and its strict bank secrecy laws. The standoff has already forced Wegelin & Co, the oldest Swiss private bank, to close shop after a guilty plea to charges of helping US clients evade taxes.

Credit Suisse, which has a large business managing rich clients' money, helped them withdraw funds from their undeclared accounts by either providing hand-delivered cash to the US or using Credit Suisse's correspondent bank accounts in the US, the Justice Department said.

Prosecutors said Credit Suisse had around 22,000 US client accounts worth around $10 billion, which included both declared and undeclared accounts.

The bank was forced to plead guilty not only because of its complicity in tax evasion, but also because of its poor cooperation in the investigation, prosecutors said. It did not begin an internal probe until early 2011, and did not preserve some evidence of the wrongdoing, documents showed.

New York's banking regulator said it would place a monitor of its choosing inside Credit Suisse, while the Fed said it was investigating whether other individuals should be subject to actions such as fines or bans. It did not name the individuals. - Reuters




Tags: Credit Suisse | Illegal | tax |

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