The bank, based in
Zurich, faces charges of money laundering and tax fraud for helping
French clients hide funds from the national tax administration from 2004
to 2012, an official in the Paris prosecutor’s office said. The
official cannot be identified, in keeping with the rules of the office.
UBS has also been
ordered to post bail of 1.1 billion euros (about $1.5 billion), the
official said. The bank did not respond to requests for comment.
The news, first
reported Wednesday by Agence France-Presse, was not entirely unexpected.
A whistle-blower’s tip had led the authorities to the Swiss bank, and
UBS was last year placed under formal investigation on suspicion that it illegally sold banking services to French citizens to enable them to move money offshore. It was ordered to pay a 10 million euro fine in that case over lax internal controls.
UBS has been entangled
in tax cases with major governments for several years. Most notably, in
2009 it reached an agreement with the United States Justice Department
to disclose client names and pay $780 million to avoid criminal
prosecution. The bank acknowledged having defrauded the Internal Revenue
Service by helping wealthy Americans evade taxes.
Credit Suisse, UBS’s cross-town rival, announced on Wednesday a second-quarter loss
of $779 million after agreeing in May to plead guilty to conspiring to
help Americans evade taxes and paying $2.6 billion in penalties.
UBS bankers in France
used the same approach to tap wealthy investors that they used in the
United States, according to French news reports, attending prestigious
cultural and sporting events and seeking to mingle with high net-worth
individuals through their social networks.
Under the French
system, formal investigation suggests prosecutors believe there is
sufficient evidence to suggest criminal charges may be warranted, but
there is no certainty that the bank will ever face trial, and such cases
often drag on for years only to be dropped.
President François
Hollande has made the pursuit of tax cheats a priority after his former
budget minister, Jérôme Cahuzac, was discovered to be hiding funds in
Switzerland and Singapore.
At the global level,
the movement to rein in tax havens has also been gathering momentum
recently, with the Organization for Economic Cooperation and Development
announcing this week standardized rules for improving banking transparency in tax matters.
But despite giving some ground to maintain its relations with the United States financial system, Switzerland, continues to hold stubbornly to its banking secrecy laws.
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