Credit Suisse Group , Switzerland's second biggest bank, went to great lengths
to assist US customers trying to open Swiss bank accounts and evade taxes,
entertaining them at a Swiss-themed ball in New York and golf tournaments in
Florida and opening a branch in the Zurich airport to serve Americans heading
for ski holidays, a Senate report said Tuesday.
In 2009, revelations in the US that UBS, Switzerland's biggest bank, had
actively facilitated US citizens to break US laws, resulted in the biggest
breach in Swiss banking secrecy since it was protected by legislation in 1934.
UBS later entered into a Deferred Prosecution Agreement with the US Department
of Justice, paid a $780m fine, and turned over about 4,700 accounts
with US client names that had not been disclosed to the Internal Revenue
The US Senate Permanent Committee on Investigations, says in a report today
that in the United States, over 43,000 taxpayers joined a voluntary IRS
disclosure program, "came clean about their hidden offshore accounts, and paid
over $6 billion in back taxes, interest, and penalties. In addition, Congress
enacted the Foreign Account Tax Compliance Act (FATCA), which requires foreign
banks to either disclose their US customer accounts on an automatic, annual
basis or pay a 30% tax on their US investment income. Just this month, at the
request of G8 and G20 leaders, the Organisation for Economic Co-operation and
Development (OECD) issued a model agreement that, like FATCA, will enable
countries to automatically exchange account information to fight cross border
In 2006, Credit Suisse held 22,000 accounts from US customers valued at 12bn
Swiss francs ($13.5bn at current exchange rates) the report said.
“It’s time to ramp up the collection of taxes due from tax evaders on the
billions of dollars hidden offshore,” Senator Carl Levin, a Michigan Democrat
and the subcommittee’s chairman, said in a statement.
At a press briefing, Senator John McCain, the
Republican ranking member of the subcommittee, said offshore tax practices operated by Credit
Suisse and other institutions had cost US taxpayers $337.3bn in potential
revenue, which he termed “the largest amount of tax revenue lost due to evasion
in the world.” He said Credit Suisse had
“greatly profited from this infamous business model”.
The report says the bank had more than 1,800 bankers working on American business
and it stressed discretion and advised wealthy clients to travel to Switzerland to
avoid creating a paper trail that would undermine their accounts' secrecy.
One former customer told Senate investigators that a Credit Suisse banker handed
over bank statements concealed in a copy of Sports Illustrated and ushered the
client to a meeting in Switzerland in a remote-controlled elevator.
The Justice Department indicted several Credit
Suisse bankers on charges of aiding tax evasion in 2011. The bank has also said
it is being investigated by the Justice Department. It is expected to settle
Brady W. Dougan, the American chief executive of
Credit Suisse, and other top bank officials are due to appear along with
two Justice Department officials at a hearing on the report on Wednesday.
REPORT: Offshore Tax Evasion: The Effort to Collect Unpaid Taxes on Billions in Hidden Offshore Accounts