Authorities are considering indicting Swiss bank Credit Suisse
The possibility, according to these persons, emerged after the bank disclosed on Friday that it is the target of a criminal investigation by U.S. federal authorities over its offshore banking activities.
Credit Suisse said in a statement from its Zurich headquarters that it had received a letter notifying it that it is a target of a U.S. Justice Department investigation concerning historical private banking services provided on a cross-border basis to U.S. persons.
While it has been known for months that Credit Suisse, Switzerland's second-largest bank, was part of a broad investigation by the Justice Department into an array of European banks and other financial institutions that sold offshore banking services to Americans, the disclosure marks the first time that Credit Suisse has publicly pinpointed its place -- and stakes -- in the criminal investigation.
When four current and former Credit Suisse bankers were charged in February with helping Americans dodge taxes, the bank said it was not a target of the broad investigation and was cooperating with the general probe.
Offshore tax havens have come under attack in recent years as cash-strapped governments seek to boost revenues in the wake of the financial crisis, forcing countries like Switzerland to pledge to cooperate more to help hunt tax cheats.
Banks involved in the broader U.S. probe include HSBC
Credit Suisse said in its statement that it had been responding to requests for information, including subpoenas, from the Justice Department. But it also said that subject to our Swiss legal obligations, we will continue to cooperate with the U.S. authorities in an effort to resolve these matters.
It was not immediately clear whether the reference to Swiss legal obligations meant adhering to Swiss bank secrecy laws that generally prohibit the disclosure of client names, or to separate talks between Bern and Washington on revising a broad, existing tax treaty between the two countries. The showdown with UBS centered on a clash between Swiss secrecy laws and U.S. insistence that they did not apply to Swiss business conducted on American soil, for American clients.
The target letter to Credit Suisse signals that the bank stands more than a risk of being indicted, said Jeffrey Neiman, a former federal prosecutor who played a central role in the federal case against UBS AG over its offshore private banking services.
In 2009, that probe led UBS to enter into a deferred-prosecution agreement with the authorities, pay a $780 million fine, admit to having violated U.S. banking, securities and tax laws, and disclose an initial 255 or so U.S. client names to the U.S. Internal Revenue Service and Justice Department.
After a legal and diplomatic showdown, UBS agreed in 2010 to disclose a further 4,450 names.
Neiman said that with Credit Suisse, I can't imagine that cooperating to the extent they can under Swiss law will be seen as full cooperation by the U.S. In addition to disclosing client names, U.S. authorities are insisting that Credit Suisse admit to criminal wrongdoing and pay a hefty fine.
Victoria Harmon, a spokeswoman for Credit Suisse in New York, declined to comment on the matter.
(Additional reporting by Silke Koltrowitz; Editing by Howard Goller)