UBS and Credit Suisse Settle U.S. Tax Fraud Case for $511 Million, Exposing Major Compliance Failures

Credit Suisse and its parent company UBS have agreed to pay a combined $511 million to settle a major U.S. tax fraud case, the Department of Justice (DOJ) announced Monday. The resolution, which includes a non-prosecution agreement (NPA), offers key compliance takeaways concerning beneficial ownership and due diligence in mergers and acquisitions.

The case involved allegations that Credit Suisse helped wealthy American clients conceal the true ownership of approximately $4 billion in assets to avoid paying U.S. taxes. The DOJ said that under the NPA, UBS and Credit Suisse are required to “cooperate fully with ongoing investigations and affirmatively disclose any information it may later uncover regarding U.S.-related accounts.” The agency emphasized that “the agreements provide no protections for any individuals.”

The foundation of the case hinged on beneficial ownership data. The charges highlighted longstanding concerns about the transparency of limited liability companies and underscored criticism of the Trump administration’s efforts to weaken the Corporate Transparency Act of 2021. That legislation aimed to create a Beneficial Ownership Information Registry to assist law enforcement and financial institutions in uncovering the real owners behind corporate structures used to commit financial crimes.

Since President Trump took office in January, the Treasury’s Financial Crimes Enforcement Network (FinCEN) scaled back requirements for U.S.-based companies and individuals to submit beneficial ownership data to the BOI Registry. Critics of the rollback argue it has significantly undermined the initiative, pointing out that it now applies only to foreign entities—a minority of U.S.-registered LLCs.

According to the DOJ, the beneficial ownership violations in the Credit Suisse case stemmed from a conspiracy involving the bank, its employees, and high-net-worth U.S. customers between 2010 and 2021. Credit Suisse “willfully” helped those clients “in concealing their ownership and control of assets and funds held at the bank.” The bank also failed to file mandatory Reports of Foreign Bank and Financial Accounts (FBARs) for its U.S. clients.

The DOJ detailed how Credit Suisse staff falsified records, processed fake donation documentation, and managed over $1 billion in undeclared accounts. These actions violated a 2014 plea agreement between Credit Suisse and the DOJ, representing a serious breach of that settlement.

The issue deepened following Credit Suisse’s emergency merger with UBS in 2023. Facing collapse, Credit Suisse was acquired by UBS for an estimated $3.2 billion under pressure from Swiss regulators. As part of that transaction, UBS inherited Credit Suisse’s unresolved compliance problems. These included prior Bank Secrecy Act violations and a $3 million penalty imposed by Singapore regulators for inadequate supervision of its Singapore-based managers.

During the merger's due diligence process, UBS discovered that Credit Suisse’s Singapore division held approximately $2 billion in assets for U.S. persons. However, the bank had “failed to adequately identify the true beneficial owners of accounts and failed to conduct adequate inquiry about U.S. indicia in the accounts,” according to the DOJ. UBS voluntarily disclosed these findings, prompting new DOJ charges and the recent NPA.

In total, UBS, representing Credit Suisse, has agreed to pay $372 million to settle violations of the 2014 plea agreement and an additional $139 million to resolve newer allegations related to offshore accounts in Singapore that were used by U.S. clients to avoid taxation.

Credit Suisse also remains under investigation in Singapore for its suspected role in a $2 billion money laundering case.

In a press release, UBS emphasized that it had no part in the underlying misconduct and remains committed to compliance. “UBS was not involved in the underlying conduct and has zero tolerance for tax evasion,” the bank said. “With this resolution, UBS is pleased to have resolved another of Credit Suisse’s legacy issues, in line with UBS’s intention to resolve legacy matters at pace in a fair and balanced way and in the best interest of all its stakeholders.”

By fLEXI tEAM