Banking Blog

Finance Blogs » Banking » Credit Suisse to pay $2.6B penalty

Credit Suisse to pay $2.6B penalty

By Allison Ross · Bankrate.com
Tuesday, May 20, 2014
Posted: 4 pm ET

banking-blog-credit-suisseCredit Suisse Group AG has pleaded guilty to criminal wrongdoing, settling a long-standing probe by the U.S. Department of Justice that the Swiss banker conspired to aid in tax evasion.

The bank has agreed to pay $2.6 billion to settle the case, which is the highest ever paid in a criminal tax case, according to the Justice Department.

The department found that Credit Suisse "engaged in an extensive and wide-ranging conspiracy to help U.S. taxpayers evade taxes," Attorney General Eric Holder said Monday in prepared remarks.

The Justice Department says Credit Suisse for decades "knowingly and willfully" helped thousands of its U.S. clients open undeclared accounts and hide offshore assets and income from the IRS.

Here's why this plea does -- and doesn't -- matter:

  • Credit Suisse has become the first financial institution in more than a decade to plead guilty to a crime, according to The Wall Street Journal.
  • This shows that big banks are not immune to criminal charges. Holder said in a video message earlier this month that there is no such thing as "too big to jail."
  • It is also meant to show the U.S. is being tough on tax evasion and is looking closely at shadowy offshore accounts.
  • However, the bank is likely to weather this storm. It said in a statement Monday that the settlement is not expected to have any "material mpact on its operational or business capabilities." Regulators reportedly looked carefully at the consequences of any actions against the bank, remembering the collapse of Arthur Andersen, Enron's accounting firm, after it was found guilty of witness tampering in 2002.
  • CEO Brady Dougan and Chairman Urs Rohner will keep their jobs for now at least, according to news reports.
  • The agreement doesn't include Credit Suisse handing over the names of its account holders.

The Justice Department is also putting pressure on BNP Paribas, France's largest bank, to plead guilty for doing business with countries like Iran and Sudan in violation of U.S. sanctions. News reports say that plea is likely to come in a matter of weeks.

What do you think of this criminal plea?

For more on all things banking, follow along with Bankrate's banking blog.

Follow me on Twitter: @allisonsross.

«
»
Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
Add a comment

(Comments may take 5-10 minutes to appear)