UBS France, based in Paris, and three current and former employees are already facing possible criminal charges on suspicion of having illegally sold banking services in the case, French prosecutors said on June 7. The authorities are trying to determine if UBS and its local unit sought to systematically identify wealthy clients to set up offshore accounts in violation of French law.
The fine announced Wednesday by the regulator, the Autorité de Contrôle Prudentiel, or A.C.P., is the largest possible under French law, and the largest ever handed down in such a case, said Geneviève Marc, a spokeswoman for the authority.
With a global crackdown on tax evasion under way, Swiss banks have been on the defensive for several years, most notably in the United States, where UBS in 2009 paid a $780 million fine and agreed to hand over the names of more than 4,450 American clients to the Internal Revenue Service to resolve accusations that it helped wealthy clients avoid taxes. That case continues to ripple through U.S.-Swiss relations, with Switzerland fumbling for a way to come clean with Washington about past practices without having to surrender its prized banking secrecy.
As was the case in the United States, French prosecutors suspect that UBS bankers sought to mix with affluent people at social and sporting events to drum up business for offshore accounts. Several hundred suspected French tax cheats linked to UBS have already been identified by the authorities.
The French regulator said Wednesday that UBS France had been warned by the autumn of 2007 of “grave concerns” that its commercial network might be facilitating illegal solicitation and tax evasion. Despite that, the regulator said, the bank “waited more than 18 months before putting in place the procedures and controles necessary to address the risk that its cross-border activities were not in compliance.”
The regulator also said the company had failed to control employees’ ability to share data with the Swiss parent institution to identify likely customers to set up offshore accounts to evade French taxes.
“We disagree with many of the disciplinary commission’s conclusions,” the parent company said in a statement from Zurich, where it is based. “UBS will further analyze the decision by the commission and will consider whether to appeal at the appropriate time.”
It also described the case as “an issue from the past,” and noted that the French regulator “acknowledges in its report that UBS France has taken appropriate steps to strengthen its compliance framework since 2009.”
The French banking regulator noted that the fine in no way prejudices the criminal investigation, to which it is providing its expertise. UBS has said that it is cooperating with the prosecutors.
The bank “does not tolerate any activities intended to help its clients circumvent their tax obligations,” it added.
Article source: http://www.nytimes.com/2013/06/27/business/global/ubs-french-unit-fined-in-tax-evasion-inquiry.html?partner=rss&emc=rss