Swiss bank: tax fraud process: UBS receives significantly lower fine

The same guilty verdict, but a far lower sentence – that is the surprising result of the appeal process of the major Swiss bank UBS for tax fraud in France.

Instead of the more than 3.7 billion euros judged in the first instance, the banking giant is now to pay a fine of just 3.75 million euros. However, in its decision on Monday, the Paris Court of Appeal also demanded an additional billion euros from the bail that the institute had to leave due to the investigation. The court found UBS guilty of money laundering through tax fraud and illegal client solicitation. In the verdict, the court did not explain why it reduced the fines so significantly.

Overall financial burden significantly higher

It was not initially clear whether the milder sentence would satisfy UBS. Especially since the institute expects a different amount – lawyer Hervé Temime spoke of a total financial burden of 1.8 billion euros. This includes an additional 800 million euros in damages, which the court awarded the French state, which appeared as a joint plaintiff in the proceedings. However, the court did not specify who exactly was to pay this sum. In the first instance, it was imposed on UBS, its French branch and three former responsible parties together.

UBS in Zurich lifted the judgment in response to subtleties. The institute had been acquitted of some allegations. The bank did not make a rating. “UBS will study this decision and keep all options open, including an appeal,” said UBS.

The case goes back to the years 2004 to 2012. According to the public prosecutor, UBS is said to have sent employees to France at the time to attract rich customers. This was encouraged to invest their money in Switzerland, bypassing the French tax authorities. Overall, it should be about assets of more than ten billion euros. The institute had rejected allegations of criminal misconduct.

Record fine off the table

Accordingly, the defense had demanded acquittal in the newly opened proceedings. The public prosecutor requested confirmation of the sentences from the first instance. In February 2019, the major bank was sentenced to the record fine of more than 3.7 billion euros. The court had ruled that it was an offense of “exceptional gravity”. According to court circles, a penalty for tax fraud of this level was unprecedented in France. UBS called the judgment incomprehensible and appealed.

UBS cannot appeal one more time, but in the case it can still go to the highest French court, the Court of Cassation. In such a revision, however, the content of the proceedings would not be re-examined, only the judgment would be checked for legal errors. UBS attorney Temime said a decision will be made soon. The verdict seems quite strange, he said, with a view to the significantly reduced sentence upon confirmation of the guilty verdict.

In addition to UBS, UBS France and six former employees also had to answer for the proceedings. The court sentenced UBS France for aiding and abetting the illegal recruiting of customers to just under 1.9 million euros. Some of the former employees received fines and several months’ probation.

The investigation into the tax affair began after information from former UBS employees. In other countries, too, UBS was targeted by the authorities for doing business with tax evaders. In Germany, the institute agreed with the judiciary in 2014 on a fine of around 300 million euros. In the US, the bank had to accept a fine of $ 780 million in 2009.