Switzerland’s Credit Suisse bank targeted for criminal investigation by DOJ

Switzerland’s second largest bank, Credit Suisse Group AG, announced last week that it is the target of a criminal investigation by the Department of Justice, pertaining to former cross-border banking services provided to US clients.

According to Justice Department guidelines, there must be “significant evidence” of illegal activity for the DOJ to target an entity for investigation. In February, four Credit Suisse employees were indicted for allegedly helping US clients evade taxes through secret bank accounts.

Following the agreement reached in 2008 with UBS, Switzerland’s largest bank, some experts have speculated that this investigation could follow a similar trajectory. As a result of that action, UBS signed a differed prosecution deal which required the bank to pay $780 million and turn over data on 250 US clients – it has since provided data on an additional 4,450 accounts.

Credit Suisse is also under investigation in Germany for allegedly helping German clients evade taxes.

US pursuit of tax fraud scheme providers continues in Switzerland

Arrest warrants were issued following the Wednesday indictment of four bankers believed to have been hiding as much as $3 billion from the IRS.

Although all four bankers are employed by the Zurich-based Credit Suisse Group, the bank itself was not charged in the indictment. However, the indictment states that bank officials "knew and should have known that they were aiding and abetting U.S. customers in evading their U.S. income taxes."

The US government alleges that the fraud goes back to as far as 1953, and that in 2008, Credit Suisse was maintaining thousands of hidden accounts for US customers. Additionally, the indictment claims that that the fours bankers encouraged clients not to participate in President Obama’s tax amnesty program last year.

The AP notes that this is the first major criminal prosecution not involving Swiss-based UBS AG. In that landmark case, the UBS turned over thousands of names and paid a $780 million fine for helping US citizens conceal assets from the IRS.

Swiss Parliament sides with I.R.S. in deal to expose potential tax evaders

The Swiss Parliament agreed today to uphold an August 2009 arrangement with the United States, whereby UBS, Switzerland’s largest bank, would disclose information on 4,500 accounts held by Americans suspected of tax evasion.

Lynnley Browning of The New York Times reports that “The parliamentary approval was a watershed moment in the history of Swiss private banking, whose tradition of client confidentiality goes back centuries.”

The decision, which represents months of legal and diplomatic efforts, will likely be used as a template to pursue tax fraud and tax evasion perpetrated in conjunction with other banks in Switzerland, such as Credit Suisse and HSBC, as well as operations in such burgeoning tax havens as Hong Kong and Singapore.