Record €3.7bn fine for UBS tax fraud

UBS has been fined a record €3.7bn (£3.2bn) by a French court on tax evasion and money-laundering charges, after allegations the Swiss bank illegally helped French clients hide assets worth €10bn from the tax authorities between 2004 and 2012

The French prosecutors told the court UBS offered ‘systematic’ support to enable customers to evade tax, and that the laundering of proceeds from the tax fraud was done on an ‘industrial’ scale.

There were claims UBS sent Swiss bankers to sports events and concerts to solicit clients amongst both wealthy spectators and athletes.

The court imposed a penalty of €3.7bn on the bank for illicit solicitation and the laundering of the proceeds of tax fraud, plus a €15m fine for its French subsidiary for being complicit and civil damages of €800m.

In a statement UBS said it strongly disagrees with the verdict and stated the bank has consistently contested any criminal wrongdoing in this case throughout the investigation and during the trial.

UBS said: ‘The conviction is not supported by any concrete evidence, but instead is based on the unfounded allegations of former employees who were not even heard at the trial.

‘No evidence was provided that any French client was solicited on French soil by a UBS AG client advisor to open an account in Switzerland.

‘As no offence in France was established, the decision effectively applies French law in Switzerland. This undermines the sovereignty of Swiss law and poses significant questions of territoriality.

‘The judgement does not depart from preconceived notions, incriminating the bank based on the fact that it offered certain legitimate and standard services under Swiss law that are also common in other jurisdictions.’

UBS went on to claim that the verdict also lacks proof and a credible methodology for the calculation of the fine and damages.

The bank said: ‘The charges of laundering the proceeds of tax fraud are without merit, as the predicate offence of an original tax fraud of French tax payers was not proven. UBS respected and followed its obligations under Swiss and French law as well as the European Tax Savings directive, which came into force in 2004.’

UBS has said it will appeal the verdict and evaluate whether the written decision requires any additional steps.

Under French law, an appeal suspends the judgment of the trial court and leads to a transfer of the case to the Court of Appeals which then retries the case in its entirety.

Report by Pat Sweet

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