New York State’s top banking regulator is investigating whether Credit Suisse Group AG’s private banking practices resulted in the evasion of state taxes, according to a person with knowledge of the matter.
New York state Department of Financial Services superintendent Benjamin Lawsky sent the Zurich-based bank a demand for documents last month, said the person, who asked not to be named because the probe is confidential.
Lawsky also petitioned the US Senate’s Permanent Subcommittee on Investigations for material gathered during that panel’s probe of Credit Suisse’s private banking and wealth management business, the person said.
On March 25, by unanimous consent, the Senate approved resolution No. 398 “to authorize the production of records by the Permanent Subcommittee on Investigations of the Committee on Homeland Security and Governmental Affairs.”
That resolution came in response to Lawsky’s petition, the person said.
Switzerland’s bank secrecy began to erode in February 2009, when the US charged UBS AG, the largest Swiss bank, with helping US citizens cheat the nation’s Internal Revenue Service (IRS). UBS avoided prosecution by paying US$780 million, admitting it fostered tax evasion and handing over data on thousands of US accounts.
US federal prosecutors have been investigating Credit Suisse’s alleged role in helping US citizens cheat the IRS for three years. Last month, a former banker at a Credit Suisse unit pleaded guilty to helping US-based clients evade taxes, implicating his superiors.
Andreas Bachmann, 56, a Swiss citizen, entered his plea in US federal court in Alexandria, Virginia, where he and six other Credit Suisse bankers were indicted in 2011 on a charge that they helped US clients hide US$4 billion in assets from the IRS.
Bachmann said superiors at his unit condoned violations of US law.
In February, the Senate subcommittee, headed by Michigan Democrat Carl Levin, presented the findings of its investigation into offshore tax evasion, focusing on Credit Suisse’s private banking and wealth management business.
Chief executive Brady Dougan deflected blame for helping clients hide billions of dollars from the IRS toward a small group of employees during his testimony at the hearing.
The subcommittee said in its report that 1,800 Credit Suisse employees helped US-based clients open 22,000 accounts, most of which were hidden from US tax authorities. The report criticized the bank for failing to discipline senior executives and chastised the US Department of Justice for not using all of its legal tools and for failing to get the names of individual account holders.
The report said Credit Suisse used a branch office at Zurich airport as well as a remotely controlled elevator and other tactics to avoid detection.