Tax evasion charges yet again strike Swiss banking giant UBS Group AG UBS as Belgian authorities have intensified investigation to ascertain whether the bank has helped clients evade taxes.
On Friday, the Brussels state prosecutor’s office stated that UBS “is suspected of having directly approached Belgian customers (without going through its Belgian subsidiary) with the goal of encouraging them to sign up to tax-evasion structure.” The probe includes “laundering, exercising illegally the profession of financial intermediary in Belgium, and serious and organized tax fraud.”
Following the probe, which is currently underway, the investigating judge is expected to put forward his findings to prosecutors.
UBS has acknowledged the launch of the formal investigation. However, a company spokesperson noted, “UBS will continue to defend itself against any unfounded allegations. Any discussion of potential charges at this stage is premature.”
Notably, in 2014, Marcel Bruehwiler, former chief executive of UBS’ Belgium unit was charged by the Belgian authorities with money laundering following raids at the bank, at his residence as well as a client’s residence. UBS sold its Belgian private-banking business to Brussels-based Puilaetco Dewaay Private Bankers later that year.
The Brussels prosecutor’s office also noted that the charges against UBS were a result of “excellent co-operation” with the French authorities. The latter had conducted probe into UBS on potential charges of illegally soliciting clients in France to open Swiss accounts for hiding undisclosed wealth in the period between 2004 and 2012. With the end of the probe, the prosecutor’s office will file its comments in the next few months, following which the investigating judges will take a decision whether the bank will face a trial.
Amid international pressure on Switzerland’s secrecy laws, Swiss banks have been under investigation regarding their transactions with wealthy clients and hidden offshore accounts. Regulatory authorities have claimed billions as settlements and fines from several banks. Notably, in 2009, UBS paid $780 million to regulators as a settlement to a U.S. criminal and civil investigation and admitted that it had helped clients evade taxes. In May 2014, another Swiss banking behemoth Credit Suisse Group AG CS pleaded guilty to criminal charges of assisting its U.S. clients to evade taxes and shelled out $2.8 billion as settlement charges to the U.S. authorities.
UBS has been under the scrutiny of other European countries’ regulators for its foreign operations. While nothing can be concluded with certainty about the latest probe, any potential legal charge stemming from the investigation will only add to UBS' legal burden and expose its financials to risks as well.
UBS currently carries a Zacks Rank #4 (Sell). A couple of better-ranked foreign banks include Banco Macro S.A. BMA and Nordea Bank AB (publ) NRBAY, both carrying a Zacks Rank #2 (Buy).
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