France’s national financial crimes unit estimates around €10 billion went unreported to French tax authorities from 2004 to 2012. (Keystone)
A French court on Wednesday found Swiss bank UBS guilty of illicit solicitation and laundering of the proceeds of tax fraud, imposing a hefty fine of €3.7 billion (CHF4.2 billion). The bank was convicted of illegally helping wealthy French clients evade tax authorities in France.
UBS, its French subsidiary and three of its former executives have also been ordered to pay civil damages of €800,000.
In a statement, the Swiss bank said it “strongly disagrees with the verdict” and plans to appeal the verdict. “The conviction is not supported by any concrete evidence, but instead is based on the unfounded allegations of former employees who were not even heard at the trial,” UBS said in a statementexternal link.
The bank said the ruling “effectively applies French law in Switzerland” because, in UBS’s opinion, the court heard no proof of crimes being committed in France.
The case concerns thousands of French citizens who moved funds to undeclared Swiss accounts to avoid taxes. The court found evidence that UBS provided services to conceal such fraudulent funds. France’s national financial crimes unit estimates around €10 billion went unreported to French tax authorities.
In November, the Parquet National Financier (PNF) – a specialised prosecutor’s office in Paris tasked with prosecuting serious and complex financial crimes – ordered a fine of €3.7 billion against UBS to punish a fraud “system” of “exceptional scale” dating from 2004 to 2012.
This amount is unprecedented in France and the PNF has indicated that this is justified at a time when tax evasion and money laundering have become “a massive phenomenon” with “industrial methods”.
Failed attempts at a settlement
There have been two failed attempts to settle the tax case since investigations began eight years ago. The first attempt broke down in 2014 because UBS refused to enter a guilty plea. In the second attempt two years ago, the bank hoped to pay fines without admitting guilt, but discussions collapsed over how much the bank should pay.
The bank has consistently denied wrongdoing, while acknowledging that it has abandoned certain practices over the years.
New approach to white-collar crimes
Authorities across Europe have been cracking down on tax evasion and suspicious banking practices following the global financial crisis in 2008. This also led to the collapse of bank secrecy practices in Switzerland.
France introduced a US-style settlement procedure two years ago intended to help financial prosecutors take on a more global role. Societe Generale SA negotiated with the PNF last year to pay £250 million to end a bribery case. HSBC Holdings Plc settled a tax probe in 2017 for £300 million, which was the largest criminal fine in France.
UBS was also at the centre of the mass tax evasion investigation of Swiss banks by the Department of Justice in the United States. The bank agreed to pay a $780 million fine in 2009, the first of many such penalties levied against Swiss financial institutions.
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