French court fines Swiss bank – UBS with record €3.7 billion

On February 20, 2019, a French court ordered Switzerland’s largest bank, UBS, to pay 3.7 billion EUR (USD 4.2 billion) fine in a tax fraud case. The penalty for helping wealthy French clients evade tax authorities was called a record fine in the country. The financial giant was convicted of aggravated money laundering of the proceeds of tax fraud and illegal bank soliciting. Prosecutors also sought a 15 million EUR fine for UBS’s French subsidiary, and fines of up to 500,000 EUR for six top executives. In the case, French authorities determined that more than 10 billion EUR had been hidden from tax officials between 2004 and 2012.

The trial opened in autumn 2018 after seven years of investigations, launched when several former employees came forward with claims of unlawful conduct. The decision came as authorities across Europe cracked down on tax evasion and dubious banking practices in the wake of the global financial crisis which erupted in 2007.

The outside pressure eventually forced Switzerland to effectively end its tradition of ironclad bank secrecy, by joining more than 90 countries which agreed to share more client account information among each other.

UBS, one of the world’s largest wealth management banks, rejected the ruling and vowed to appeal saying its operations had complied with Swiss law. It denied criminal wrongdoing; in its a statement we can read that the conviction was based on “unfounded allegations of former employees.”  It also said that it was „unaware” that some French clients had failed to declare assets in Switzerland, and that prosecutors have not produced any proof, such as client names or account numbers, to back up their fraud claims.

The case was closely watched by industry executives, as Paris and other European capitals are trying to attract financial business from London in a perspective of likely chaotic departure of Britain from the EU.

AM, Verificators

- 21 lutego 2019 - EN