UBS to Pay Billions in Settlement in the US... 'Tax Evasion Suspicion' Hits CS Acquisition

Switzerland's largest bank UBS is expected to pay at least several hundred billion won in criminal settlement fines in the United States. This is due to a violation of the agreement made with the U.S. Department of Justice regarding suspicions that Credit Suisse (CS), acquired in 2023, supported tax evasion by Americans.

Reuters Yonhap News

The Wall Street Journal (WSJ) reported on the 9th (local time), citing sources, that the U.S. Department of Justice is expected to finalize an agreement with UBS on this matter as early as this week.

WSJ stated, "The Department of Justice has been discussing how to handle CS's violations after UBS's acquisition of CS," adding, "This could be the last major action by the DOJ before the Biden administration, which promised to take a tough stance on repeated corporate crimes, leaves office." The outlet predicted that the criminal settlement fine UBS must pay will amount to at least several hundred million dollars (several hundred billion won).

Previously, CS admitted to encouraging or aiding offshore tax evasion by American clients in 2014. It also entered into a criminal settlement agreement to avoid prosecution by paying a fine of $2.6 billion (approximately 3.8 trillion won). The agreement included provisions to close all undeclared American accounts and provide all American account information to U.S. authorities. This clause allows for additional penalties in case of violations.

However, the U.S. Department of Justice discovered that even after the criminal settlement, CS had hundreds of millions of dollars in undeclared American accounts that were neither reported nor closed. Due to this breach of the agreement, some U.S. taxpayers were able to avoid investigation by transferring funds from these undeclared accounts to other banks, WSJ pointed out. The U.S. Senate Finance Committee, which immediately launched an investigation, confirmed these facts in a report and announced that CS had seriously violated its agreement with the DOJ.

Earlier, CS suffered a loss of about $5.5 billion (8 trillion won) due to the margin call crisis of Archegos Capital, operated by Korean-American investor Bill Hwang, and faced a crisis before being acquired by its domestic competitor UBS in 2023. Consequently, the responsibility for CS's violation of the criminal settlement agreement also falls on UBS.