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Senate holds hearings to probe offshore tax evasion

Senator Carl Levin, D-MICredit Suisse agreed last Friday to pay $196.5 million and admit wrongdoing to settle charges that it provided cross-border brokerage and investment advisory services to U.S. clients without first registering with the SEC.

This week the Senate’s Permanent Subcommittee on Investigations held a hearing into U.S. legal and regulatory efforts to collect unpaid taxes resulting from offshore tax evasion.

According to the SEC in its settlement with the Zurich-based bank, Credit Suisse retained as many as 8,500 U.S. client accounts that held securities from 2002 to 2008.

The SEC said the bank knew about the registration requirements and had taken steps to register, but those efforts weren’t properly executed or monitored.

Credit Suisse shut down its cross-border advisory and brokerage division in 2008, after U.S. agencies began to investigate unregistered cross-border businesses by a number of companies.

Despite U.S. laws requiring this disclosure, companies like UBS — which had 52,000 U.S. customers with Swiss accounts holding $18 billion in hidden assets at one point — enabled U.S. citizens to cheat on their taxes.

Switzerland and other secrecy jurisdictions at that time declared they would no longer use secrecy laws to facilitate tax evasion. “A flurry of new tax information-exchange agreements were signed around the world promising a new transparency,” Senator Carl Levin (D-Mich.) said in opening remarks to the Subcommittee hearing.

“After seven Credit Suisse bankers were indicted by the Justice Department in 2011, we checked in again, and found the bank had not yet closed thousands of undeclared Swiss accounts held by U.S. taxpayers. So we took a closer look,” Senator Levin said.

None of those seven bankers have stood trial or been the subject of a U.S. extradition request, he said.

Senator Levin’s statements before the Subcommittee on Investigations’ hearing on offshore tax evasion can be found here.


Julie DiMauro is the executive editor of FCPA Blog and can be reached here.

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