Credit Suisse Caught in Major Global Tax Evasion Investigation

Credit Suisse, Switzerland’s second largest bank, has recently found itself right in the middle of a major international tax evasion case.

The Dutch government is leading an international coalition of five different tax authorities that are carrying out a criminal investigation into tax evasion in several European countries, including Australia, Germany, France and the UK. The coalition is reportedly specifically looking into undeclared ‘black accounts’ and money laundering by a global financial institution and some of its employees. The investigation was allegedly prompted by a tip to the Dutch government pertaining to assets hidden in offshore accounts, allegedly totaling millions of euros.

The tip supposedly is relevant to some 55,000 accounts in Europe and 4,000 specifically in the Netherlands, all of which are said to be accounts at one Swiss bank. The coalition has not officially named the bank as Credit Suisse, but the bank did confirm that its offices in Amsterdam, London, and Paris were searched at the end of March.

In addition to searching Credit Suisse offices, authorities raided homes and offices across the Netherlands and France. So far, the investigation has resulted in the investigation of some 55,000 suspect accounts along with the confiscation of millions of euros in cash, real estate, paintings, and jewelry. Moreover, two people have already been arrested.

This certainly is not the end of the investigation, as it appears there is still much more to come. “The first phase of the investigation, which will see further, targeted activity over the coming weeks, is focused on senior employees from within the institution, along with a number of its customers,”

British tax authorities, which are part of the coalition investigating the matter, told the press last week, “The international reach of this investigation sends a clear message that there is no hiding place for those seeking to evade tax. Promoters and facilitators of tax evasion schemes and their customers, need to wake up to reality and accept that attempting to hide wealth overseas or within institutions, doesn’t work and doesn’t place them out of our reach.”

Apparently, Credit Suisse was surprised by the investigation and subsequent searches, and has said that it takes an active position on tax compliance throughout Europe. It maintains that it has applied Dutch and French voluntary tax disclosure programs and exited all of its clients that have failed to comply, in addition to its application of a withholding tax agreement with the UK that has been in effect since 2013.

Analysts say this is an exceptional case given the sheer volume of accounts implicated, as well as the international scope of the investigation. The market seems to agree that this is not good news for Credit Suisse, as following the searches the bank fell 1.2 percent in Swiss Trading, a significant hit.

This is the fourth the bank that has found itself embroiled in tax evasion controversy. In 2011, the bank paid 150 million euros to German authorities to settle a tax evasion dispute with the German government. In 2014, the bank was fined a staggering $2.6 billion after admitting that it had helped American citizens to evade some of their tax obligations. Lastly, in October 2016, it agreed to pay close to 110 million euros to Italian authorities to resolve a probe into its use of insurance polices allegedly engineered to help clients evade taxes.

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