UBS fined £3.2bn for tax evasion by French court

UBS ordered to pay record $5.1-billion fine for helping French clients hide assets

UBS ordered to pay record $5.1-billion fine for helping French clients hide assets

UBS angrily rejected a French ruling against the Swiss bank in a tax evasion and money laundering trial.

The trial began last autumn after a seven-year investigation, launched after former employees came forward about the bank's practices.

The penalty is high by European standards, although in the United States judges have levied higher fines including the $8.9bn a USA court in 2015 ordered BNP Paribas to pay for violating US economic sanctions against Sudan, Cuba and Iran.

The pressure eventually forced Switzerland to effectively end its tradition of ironclad bank secrecy, by joining more than 90 countries which agreed to automatically share more client account information with each other.

French financial prosecutors at the Parquet National Financier were however dealt a blow with two successive acquittals of art dealer, Guy Wildenstein, in a case where he was accused concealed paintings worth hundreds of millions of dollars in offshore trusts to avoid taxes.

UBS, which ponied up 1.1 billion euros in "corporate bail" in 2014, also let loose on how the French judge arrived at the penalty, saying it couldn't identify a credible methodology behind it. But the fine was far below the 1.6 billion sought by prosecutors.

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UBS denied any wrongdoing and the case could drag on for years if appealed by the Swiss bank, which has set aside $2.46 billion to cover potential losses from litigation and regulatory requirements. The wealth manager accuses France of flouting Swiss laws.

"Bankers in Europe are watching this case closely and will try to assess how exposed they are to similar risk", Thierry Bonneau, a banking law professor at Paris Pantheon-Assas University, said ahead of the ruling.

FILE PHOTO: The logo of Swiss bank UBS is seen in Zurich, Switzerland October 25, 2018. The Swiss bank vowed to put up a fight.

Only one "milk ticket" was found during the inquiry, prompting defence lawyers to argue there was no proof to justify claims of massive fraud.

UBS's lawyers have said the prosecution failed to show material evidence of specific cases of clients advised to evade tax payments. UBS later paid German officials 300 million to settle similar allegations.

In November UBS was again sued by United States authorities, who accuse the bank of misleading investors over the sale of mortgage-backed securities in 2006 and 2007, just before the financial crisis struck. UBS said at the time that it disagreed with "the allegations, assumptions and legal interpretations being made".

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