In a new, tougher approach to cracking down on tax evasion, a Paris appeals court has ordered Swiss bank UBS to pay a bond of €1.1 billion (CHF1.3 billion) on charges of helping French customers hide their assets.
Although legal proceedings against UBS in France are ongoing, the court required the deposit to be paid by September 30 as a potential criminal penalty for alleged money laundering, rejecting an appeal by the Zurich-based bank. The amount corresponds to 42.4% of UBS’s after-tax profits last year and 2.8% of its equity, as well as up to half of the amount of money UBS allegedly laundered.
The French judges who requested the payment also said it reflects the size of the fine UBS could pay if it is found guilty.
Judges suspect UBS of having established a money laundering system that allowed French residents to hide their assets from tax liability. The alleged laundering took place from 2004 to 2012, in a practice investigators believe was “habitual”.
UBS has said it will appeal the decision once again.
In a position paper released Monday, the bank said it was "extremely disappointed with this decision," that does not take into account all the arguments raised at the hearing. The statement continued that the trial is "highly politicised" and has not complied with the principles of the rule of law since the beginning of the investigation.
Eric Vernier, a Paris-based tax fraud researcher, told Bloomberg earlier that France’s approach of demanding bail “is completely new and a very strong signal” of its tougher approach to organisations aiding tax evasion.
“It’s like banging a fist on the table to make an impression on everyone’s mind,” he said.
Proceedings against UBS in France began in 2012. In mid-2013, French authorities widened the investigation and demanded the bank pay a deposit of €2.875 million.
With the opening of a formal investigation in late July, prosecutors increased the deposit to €1.1 billion, an amount UBS fought on appeal. Monday’s verdict rejects the bank’s appeal and finalises the required payment.
swissinfo.ch and agencies