On Monday, the Swiss financial giant Credit Suisse became the largest bank in two decades to plead guilty in a Justice Department investigation. The bank has admitted to facilitating tax evasion and will now pay $1.8 billion in fines, including $670 million in restitution to the IRS.
Attorney General Eric Holder described the bank’s behavior and the outlines of the plea agreement in a Monday evening press conference. Credit Suisse, he said, “engaged in an extensive and wide-ranging conspiracy to help U.S. taxpayers evade taxes” through the use of offshore bank accounts.
“The bank went to elaborate lengths to shield itself, its employees, and the tax cheats it served from accountability for their criminal actions,” he said. “They subverted disclosure requirements, destroyed bank records, and concealed transactions involving undeclared accounts by limiting withdrawal amounts and using offshore credit and debit cards to repatriate funds. They failed to take even the most basic steps to ensure compliance with tax laws.”
The $1.8 billion Credit Suisse will pay to the federal government is substantially lower than the $13 billion settlement which JPMorgan Chase & Co. agreed to pay six months ago. Yet JPMorgan, which faced a Justice Department investigation over allegations of securities fraud, never admitted to criminal wrongdoing; the Justice Department reportedly considered trying to force a plea, but never did. Credit Suisse may have a smaller bill than JPMorgan, but it carries the burden of an admission of guilt.
The Justice Department cast the Credit Suisse investigation as part of a broader war on the global shadow banking system, which may house as much as $20 trillion in tax-proof money worldwide. In 2012 alone, $150 billion in taxes went unpaid to the federal government thanks to the shadow banking system. Deputy Attorney General James Cole told reporters that the Department would likely take further action against the shadow banking system “in the coming months.”
Credit Suisse did not immediately return a request for comment.